University  of  California. 

FROM    THK    LIBRARY    OF 

-\ 

DR.     FRANCIS     LTE  B  I-:  K  , 

I'rofe.-^or  <>f  History  »nd  Law  in  Columbia  Ollcjre,  Now  York. 


•• 


THK   CIKT    OK 


MICHAEL     REESE 

Of  Xan 


ON   THE 


PROBABLE   FALL 


THE 


VALUE    OF    GOLD: 


THE 


COMMERCIAL  AND  SOCIAL  CONSEQUENCES  WHICH  MAY 
ENSUE,  AND  THE  MEASURES  WHICH  IT  INVITES. 


MICHEL  CHEVALIEK, 

MEMBER   OF   THE   INSTITUTE   OF  FRANCE,   ETC.    ETC. 


TRANSLATED  FROM  THE  FRENCH,  WITH  PREFACE, 

BY 

RICHAKD  COBDEN,  ESQ. 


YOEK: 
D      APPLETON     AND     COMPANY, 

346   &   348  BROADWAY. 
1859. 


TKANSLATOR'S  PEEFACE. 


THE  substance  of  tlie  work,  of  which,  the  following  pages 
are  a  translation,  appeared  originally  in  the  Revue  des 
deux  Mondes,  in  the  autumn  of  1857,  and  was  after- 
wards reprinted  in  a  pamphlet  form.  The  author  has 
since  rewritten  and  enlarged  it  to  double  the  original 
size.  The  present  translation  will  appear  simultaneously 
with  the  French  edition. 

The  question  of  the  probable  fall  in  the  value  of  gold, 
and  the  consequent  rise  in  that  of  all  other  commodities, 
wherever  gold  is  the  standard  of  value,  has  not  hitherto 
attracted  so  much  attention  in  this  country  as  it  has  in 
France,  or  as  its  great  importance  would  seem  to  demand. 
In  introducing  the  Bank  Act  of  1844,  Sir  Kobert  Peel 
said  : — "  There  is  no  contract,  public  or  private,  no 
engagement,  national  or  individual,  which  is  unaffected 
by  it.  The  enterprises  of  commerce,  the  profits  of  trade, 
the  arrangements  made  in  all  the  domestic  relations  of 
society,  the  wages  of  labour,  pecuniary  transactions  of 
the  highest  amount  and  the  lowest,  the  payment  of  the 
national  debt,  the  provision  for  the  national  expenditure, 
the  command  which  the  coin  of  the  smallest  denomina- 
tion has  over  the  necessaries  of  life,  are  all  affected  by 


TRANSLATOR'S  PREFACE. 

the  decision  to  which  we  may  come  on  that  great  question 
which  I  am  ahout  to  submit  to  the  consideration  of  the 
committee/'  The  main  object  which  the  author  of  the 
present  Bank  Act  had  in  view,  was  to  prevent  those 
fluctuations  in  the  amount  of  the  currency  which  were 
alleged  to  have  arisen  from  the  arbitrary  action  of  the 
Bank  of  England,  and  which  rarely  exceeded  two  or  three 
millions  in  the  course  of  a  long  series  of  years.  With 
much  greater  force,  then,  must  his  expressions  apply  to 
the  present  state  of  things,  when  an  annual  increase  in 
the  production  of  gold  of  nearly  thirty  millions  has  sud- 
denly taken  place,  more  than  the  half  of  .which  finds  its 
way  to  our  shores. 

It  is  estimated  by  M.  Chevalier  that  the  present  yield 
of  gold  amounts,  in  ten  years,  to  about  as  much  as  the 
entire  production  during  the  356  years  which  intervened 
between  the  date  of  the  discovery  of  America  by  Colum- 
bus, and  the  year  1848,  when  the  mines  of  California 
were  discovered.  It  is  probable  that  the  present  produc- 
tion of  gold  amounts  to  five  times  that  of  the  year  1847. 
Had  such  an  increase  occurred  in  the  supply  of  any 
article,  such  as  corn,  sugar,  or  cotton,  of  which  the  whole 
annual  produce  is  consumed  within  a  couple  of  years,  it 
would  have  probably  caused  a  depreciation  to  the  extent 
of  nine-tenths  of  its  value.  But  owing  to  the  large  stock 
of  gold  in  existence,  amounting  to  probably  more  than 
twenty  or  thirty  times  even  its  present  yearly  production, 
it  takes  some  time  to  affect  its  volume  to  any  appreciable 
extent.  UMess,  however,  the  cardinal  rule  of  commerce, 
that  quantity  governs  price,  which  applies  infallibly  to 
all  other  commodities,  loses  its  force  when  gold  is  con- 


TRANSLATOR'S  PREFACE.  5 

cerned;  this  sudden  and  great  increase  must  be  followed 
by  a  reduction  of  value. 

That  so  little  effect  should  have  hitherto  been  pro- 
duced upon  the  value  of  this  precious  metal,  especially  as 
measured  by  its  relation  to  silver,  is  accounted  for  by  a 
reference  to  what  is  now  passing  in  France,  where  the 
gradual  substitution  of  a  gold  for  a  silver  currency  has. 
during  the  last  eight  years,  absorbed  the  greater  portion 
of  the  gold  imported  into  Europe  from  the  new  mines. 
On  this  subject,  M.  Chevalier  has  given  us  some  very 
striking  statistical  facts.*  France  has  in  this  way,  to 
use  his  expression,  been  the  "parachute"  which  has 
retarded  the  fall  in  gold.  It  will  be  seen  that  his  main 
object  has  been  to  induce  the  French  government  to  put 
an  end  to  this,  by  adopting  in  practice,  what  he  main- 
tains has  always  been  the  theory  of  the  French  law,  a 
silver  standard.  Should  his  arguments  be  successful 
(and  it  is  difficult  to  see  how  the  French  government 
can  resist  his  facts  and  reasonings — certainly  it  can  never 
answer  them),  or  should  the  process  of  absorption  cease, 
from  the  exhaustion  of  the  stock  of  silver  held  in  France, 
then  we  may  anticipate  a  more  rapid  fall  in  the  value 
of  gold. 

It  will  be  seen  that  M.  Chevalier  does  not  recommend 
the  adoption  of  any  legislative  measures  to  meet  the 
change  in  this  country.  He  considers  that  gold  having 
been  avowedly  the  legal  tender  and  the  sole  standard  of 

*  At  page  59  will  be  found  a  statement  of  the  gold  coined  at  the  Paris 
mints.  It  is  brought  down  to  the  end  of  1857.  I  have  since  ascertained 
that  the  amount  coined  in  the  year  1858  exceeded  480,000,000  francs 
(£19,600,000). 


TRANSLATOR'S  PREFACE. 

value  in  England,  and  all  existing  contracts  having  been 
entered  into  with  that  knowledge,  the  parties  to  them 
must,  so  far  as  the  legislature  is  concerned,  abide  the 
consequences  of  any  natural  disturbance  of  the  value  of 
this  metal. 

But  although  government  may  have  no  right  to  inter- 
fere with  the  past,  it  ought  not  to  be  so  summarily 
excluded  from  all  interference  with  the  future,  at  least 
to  an  extent  necessary  to  facilitate  voluntary  contracts 
involving  payments  otherwise  than  in  gold.  An  able 
writer  on  the  currency*  has  recommended  the  establish- 
ment of  life  assurance  companies  on  the  basis  of  a  silver 
standard.  Should  a  great  and  rapid  depreciation  of  gold 
take  place,  some  such  precaution  as  this,  in  all  contracts 
extending  over  a  long  period  of  time,  may  be  necessary. 
It  would  then  be  a  convenience  to  have  the  relative 
values  of  gold  and  silver  periodically  published  under  the 
authority  of  a  law,  by  the  Bank  of  England  for  instance, 
computed  from  the  exchanges  of  the  day  with  those 
countries,  such  as  Holland  and  Belgium,  where  a  silver 
standard  exists. 

Another  mode  of  evading  the  consequences  of  a  depre- 
ciation of  the  currency  might  be  found  in  a  resort  to 
something  like  the  primitive  practice  of  paying  in  kind. 
Where  long  engagements,  such  as  farm  leases,  -are  entered 
into,  the  parties  might  stipulate  for  a  rent  to  be  regulated 
by  the  prices  of  produce,  upon  the  principle  of  the  tithe 
commutation  rent  charge.  In  this,  as  in  all  other  bar- 
gains and  investments,  it  will  only  remain  for  individuals 

*  Mr.  James  Maclaren. 


TRANSLATOR'S  PREFACE.  7 

to  take  such  precautions  as  are  in  their  power  to  guard 
themselves  from  the  consequences  of  the  impending 
change.  Should  the  views  of  M.  Chevalier  be  realised, 
there  will  be  much  anxious  deliberation  as  to  the  best 
mode  of  escaping  from  the  effects  of  a  universal  derange- 
ment in  the  value  of  labour  and  property.  Wages  and 
salaries  of  all  kinds  would  eventually  rise  in  proportion  to 
the  enhanced  price  of  commodities,  but  the  transition 
would,  I  fear,  be  accompanied  with  much  inconvenience 
and  suffering.  The  rise  would  not  be  steady  and  continu- 
ous, but  would  be  effected  by  leaps,  and  after  struggles 
which  would  tend  to  derange  and  convulse  the  relations 
of  capital  and  labour.  With  respect  to  those  who  have 
property  to  invest,  they  would,  as  a  rule,  avoid  those 
investments  which  yield  incomes  of  a  fixed  amount  of 
money,  such  as  dividends  from  the  funds,  interest  from 
bonds  and  mortgages,  as  well  as  annuities,  rent  charges, 
ground  rents,  guaranteed  stock,  &c.  ;  whilst  property  of 
an  expansive  nature,  which  rises  in  proportion  to  the 
depreciation  of  the  currency,  such  as  land,  houses,  shares, 
&c.,  would  be  preferred. 

The  merchant  and  trader  who  balance  their  transac- 
tions in  two,  or  three,  or  at  the  utmost  six  months, 
would  be  but  slightly  affected,  in  so  far  as  the  value  of 
their  capital  is  concerned,  by  the  depreciation  of  the 
standard  ;  but  they  would  experience  the  evil  in  another 
form.  The  tendency  to  a  general  rise  of  prices  would 
lead  to  an  expansion  of  credit,  and  an  increase  of  specu- 
lation, which  would  be  followed  by  panics  and  convulsions 
of  greater  violence  and  more  frequent  recurrence  than 
have  been  hitherto  experienced.  Instead  of  a  crisis 


8 


TRANSLATOR'S  PREFACE. 


visiting  the  commercial  world  once  in  each  decade,  its 
return  might  be  expected  every  five  years.  The  manu- 
facturer would  probably  find  it  more  difficult  to  procure 
the  raw  material  of  his  industry  at  remunerating  prices, 
for  speculation  will  always  be  directed  towards  raw  pro- 
ducts in  preference  to  manufactured  articles.  This  was 
the  case  previous  to  the  late  panic  ;  and  even  at  the 
present  moment,  whilst  we  are  still  in  the  eddy  of  a 
crisis,  the  prices  of  the  raw  materials  of  our  staple 
manufactures  maintain  a  high  value,  as  compared  with 
any  corresponding  previous  period.  The  very  nature  of 
the  trade  created  by  the  new  gold  mines  is  calculated  to 
increase  this  evil :  for  it  cannot  be  denied  that  it  is  a 
sterile  commerce  which  yields  neither  raw  material  nor 
capital.  I  speak  of  that  portion  of  the  new  gold,  proba- 
bly more  than  seven-eighths  of  the  whole,  which  passes 
through  the  Mint  and  enters  into  the  currency ;  the 
effect  of  which  is,  instead  of  increasing  the  supply  of  food, 
raw  material,  or  capital,  simply  to  render  more  bulky  and 
abundant  an  instrument  of  exchange,  the  chief  merit  of 
which  before  consisted  in  its  scarcity  and  portability. 

It  may  be  well  to  caution  the  reader  against  falling 
into  any  misapprehension  as  to  the  author's  views  respect- 
ing the  amount  of  depreciation  to  be  expected.  Although 
throughout  his  argument  he  assumes  that  gold  will  fall 
to  the  half  of  its  present  value,  yet  he  more  than  once 
explains  that  he  does  so  only  for  clearness  of  illustration, 
and  not  because  he  predicts  any  certain  amount  of 
depreciation.  At  the  same  time  he  draws  the  conclu- 
sion, from  the  facts  of  the  case,  that  there  must  be  a 
fall  in  the  value  of  gold  in  consequence  of  its  greatly 


TRANSLATOR'S  PREFACE.  9 

increased  quantity,  In  this  view  he  will  be  supported 
by  all  our  great  authorities  on  the  currency,  to  whatever 
party  they  may  belong. 

There  have  been  two  schools  in  this  country,  on  the 
monetary  question,  the  one  having  at  its  head  Lord  Over- 
stone,  who  has  attributed  great  fluctuations  in  the  prices 
of  commodities  to  the  action  of  the  Bank  on  the  cur- 
rency ;  and  the  other,  represented  by  the  late  Mr.  Tooke, 
who  maintained  that,  so  long  as  the  notes  of  the  Bank 
were  convertible  into  gold  on  demand,  they  could  not 
become  depreciated  or  cause  a  rfee  of  prices.  Bui.  the 
latter  authority  would  have  been  as  ready  as  the  former  to 
admit  that  any  large  addition  to  the  quantity  of  metallic 
money  must  lead  to  a  diminution  in  .its  value.  It  seems, 
however,  that  the  disciple,*  and,  in  a  certain  sense,  the 
literary  heir  of  Mr.  Tooke,  is  pushing  his  doctrines  beypnd 
the  limits  prescribed  by  his  eminent  master.*  At  a  public 
meeting  last  summer,  this  gentleman  is  reported  to  have 
brought  forward,  as  a  proof  that  no  rise  had  been  caused 
by  the  new  gold  in  the  price  of  commodities  in  the  years 
preceding  1857,  the  fact  that,  at  the  time  wlien  lie  ivas 
speaking,  a  great  fall  had  taken  place  in  the  value  of  all 
articles  of  commerce.  The  circumstance,  however,  that, 
at  the  moment  when  he  spoke,  the  country  was  still 
under  the  influence  of  the  great  commercial  crisis  which 
had  occurred  a  few  months  before,  rendered  any"  such 
comparison  of  prices  quite  valueless.  It  is  in  the  nature 
of  things  that  any  extraordinary  rise  of  prices  should  be 
followed  by  such  a  rebound  as  we  have  lately  witnessed. 

*  Mr.  Newmarch. 


10 


TRANSLATOR'S  PREFACE. 


The  only  useful  comparison  that  could  be  drawn  is  by 
comparing  the  range  of  prices,  a  few  months  after  the 
panic  of  1857,  with  the  prices  of  a  corresponding  period 
after  the  panics  of  1825,  1836,  and  1847.  From  the 
cursory  reference  which  I  have  been  able  to  make  to  the 
valuable  tables  in  Mr.  Tooke's  work  on  prices,  I  am  in- 
clined to  the  opinion  that  the  comparison  would  be  found 
to  confirm  the  views  of  M.  Chevalier. 

The  accomplished  author  of  the  following  treatise  is 
already  known  among  us  as  one  of  the  most  earnest  of 
living  writers  in  favour  of  free  trade,  and  as  the  champion 
of  every  cause  which  tends  to  promote  the  progress  of 
an  elevated  civilisation,  and  the  best  interests  of  hu- 
manity. He  has  qualified  himself  for  the  present  task 
by  a  long  and  laborious  study  of  the  currency  question, 
having  given  to  the  world  some  essays  on  money  and  the 
precious  metals,  which  are  recognised  as  standard  works, 
and  invest  his  name  with  an  authority  on  such  subjects, 
hardly  second  to  that  of  Humboldt  himself.  In  the  fol- 
lowing pages  will  be  found  almost  every  fact  and  argu- 
ment necessary  for  the  formation  of  an  opinion  on  one  of 
the  most  important  problems  of  our  day,  and  they  are 
presented  with  all  the  care  and  conscientiousness  for 
which  the  writer  is  so  distinguished. 

I  wish  I  could  believe,  that  either  in  the  original 
(where  a  brilliant  style  is  added  to  its  other  merits)  or 
in  the  translation,  this  work  will  be  read  as  widely  as, 
from  its  great  importance,  it  deserves  to  be.  The  very 
topic  forbids  such  a  hope.  It  is,  nevertheless,  a  subject 
on  which  the  early  possession  of  knowledge,  and  the 
exercise  of  forethought,  will  confer  great  advantages  over 


TRANSLATOR'S  PREFACE.  11 

ignorance  and  indifference,  and  afford  the  only  safeguard 
against  probable  loss.  It  has  been  with  the  view  to 
awaken  public  attention  to  a  question  which  may  involve 
the  most  important  social  consequences,  and  to  offer 
greater  facilities  for  obtaining  information  upon  it,  that 
I  have  undertaken  the  most  humble  of  literary  tasks, 
that  of  the  translator,  in  presenting  to  the  English  reader 
the  ablest  and  most  complete  treatise  on  the  new  gold 

discoveries. 

K.  C. 

JANUARY,  1859. 


CONTENTS. 


SECTION   I. 

PRELIMINARY   OBSERVATIONS. 

PAGE 

CHAP.  I.— The  question  stated,  .  .  .  .  .  .15 

CHAP.  II. — Preliminary  observations  on  the  rise  of  prices  which  has  charac- 
terised the  last  few  years,  .  .  .  .  .  .  .21 

SECTION   II. 

AX  APPEAL  TO  SOME  OF  THE  FUNDAMENTAL  NOTIONS  UPON  THE  NATURE  AND 
CHARACTERISTICS  OF  MONEY. 

CHAP.  I. — What  we  ought  to  understand  by  value  and  price. — Twofold  defi- 
nition of  money.— -The  standard  or  fineness  of  money,  .  .  .24 

CHAP.  II. — Of  the  meaning  of  the  word  standard. — The  metal  standard  is 
that  from  which  is  derived  the  monetary  unit. — The  two  ideas  standard 
and  monetary  unit  imply  each  the  other,  .  .  .  .  .32 

CHAP.  III. — O.f  the  character  of  exchanges  as  affected  by  the  invention  of 

x  money. — How  the  rise  and  fall  of  the  precious  metals  are  manifested  in 

^  the  course  of  trade. — Phenomena  of  the  rise  and  fall  in  commodities,  34 

CHAP.  IV. — On  the  possibility  of  conferring  the  quality  of  standard  upon 
two  metals  at  once,  .  .  .  .  .  .  .  .38 

CHAP.  V. — Of  the  meaning  of  certain  words  specially  applicable  to  money 
and  the  precious  metals : — Price,  value,  premium,  dearness,  cheapness,  46 

SECTION   III. 

OF   THE  PRESENT  PRODUCTION  OF  GOLD  AND  ITS  OUTLET. 

CHAP.  I. — Of  the  increase  in  the  present  production  of  gold  as  compared 
with  the  past. — The  extended  coinage  of  gold  which  has  followed,  .  54 

CHAP.  II. — Diminished  coinage  of  silver  in  France. — Gold  is  already  at  a 
discount  in  comparison  with  silver,  .  .  .  .  .60 

CHAP.  III. — Extraordinary  exportation  of  silver  from  the  civilised  countries 
of  the  Western  World  towards  India  and  China. — To  what  extent  it  is 
likely  to  continue,  .  ;  .  .  •  .  .  .64 

CHAP.  IV. — France  serves  temporarily  as  a  parachute  to  retard  the  fall  of 
gold, 73 

CHAP.  V. — Whether  the  extraordinary  production  of  gold  ought  to  be  con- 
sidered as  an  ephemeral  accident. — The  crushing  of  the  quartz  veins. — 
Mines  in  Siberia. and  elsewhere,  .  .  .  .  .  .76 


14 


CONTENTS. 


SECTION   IV. 

ON  THE  NEW  OUTLET  THAT  MAT  BE  EXPECTED  FOR  THE  PRODUCTION  OF  THE  NEW 
GOLD  MINES,  AND  WHETHER  IT  WILL  BE  IN  PROPORTION  TO  THE  EXTENT  OF  THIS 
PRODUCTION. 

PAGB 

CHAP.  L— Of  the  outlet  afforded  by  those  countries  which  at  present  have 
evidently  an  insufficient  proportion  of  metal  in  their  currencies,  .  87 

CHAP.  II. — Of  the  increase  of  gold  money  which  may  arise  from  the  devel- 
V  opment  of  business,  and  the  increase  of  population. — Of  wear  and  tear. 
— Of  hoarding. — Of  shipwrecks,  .  .  .  .  .  .94 

CHAP.  III. — On  the  employment  which  habits  of  luxury  may  offer  to  the 
gold  of  the  new  mines,  .......  106 

CH/P.  IV.— Conclusion  of  the  preceding  chapters.— The  fall  of  gold/very 

V    probable,  if  not  inevitable,  in  relation  to  all  other  commodities,    »       .    118 

SECTION   V. 

CHAPS.  I.  to  Y. — On  the  part  assigned  to  gold  in  the  monetary  legislation  of 
France,  .  121 

SECTION   VI. 

CONSEQUENCES  OF  THE  FALL  IN  THE  VALUE  OF  GOLD. 

CHAP.  I. — A  general  distinction  between  those  private  incomes  which  will, 
and  those  which  will  not  be,  affected. — Of  a  certain  collective  loss 
which  the  people  of  France  will  suffer,  .....  124 

CHAP.  II. — Of  the  sufferings  and  difficulties  which  will  accompany  the 
transition,  .  .  .  .  .  .  .  .  128 

CHAP.  III. — On  the  gain  which  would  result  to  certain  classes  of  persons, 
»  and  to  society,  from  the  fall  in  gold. — The  saving  to  the  State  from  the 
payment  of  the  dividends  on  the  public  debt,  ....  137 

SECTION   VII. 

OF  THE  MEASURES  TO  BE  TAKEN  TO  AVERT  THE  EVIL  EFFECTS  OF  THE  FALL  OF  GOLD. 

CHAP.  I. — Case  of  a  State  like  England,  where  gold  is  the  standard,  and 
where  there  is  no  other  money  but  gold,  ....  144 

CHAP.  II. — Case  of  a  State,  such  as  France,  where  there  is  a  silver  standard, 
but  also  a  gold  currency,  .  .  .  .  .  .  .  148 

CHAP.  III. — The  measure  here  recommended  is  a  necessary  complement  of 
the  law  of  Germinal,  year  11,  ......  164 

CHAP.  IV. — On  some  inconveniences  inherent  in  the  combination,  respect- 
ing a  gold  currency,  recommended  in  this  work,  .  .  .  167 

CHAP.  V. — Of  a  plan  recommended  for  maintaining  the  parallel  circulation 
of  silver  and  gold,  .  .  .  .  .  .  .  170 

CHAP.  Vl. — Of  the  resolutions  of  a  commission  appointed  by  the  Minister 
of  Finance  in  1857,  .  .  .  .  .175 

CHAP.  VII. — Of  various  acts  which  the  legislation  of  the  ancient  regime 
upon  money  treated  as  crimes,  and  with  regard  to  which  some  persons 
of  our  day  propose  to  establish  penalties. — Selecting  and  melting ;  trade 
in  coins ;  exportation,  .......  183 

CHAP.  VIII. — Of  a  different  solution  which  has  been  recommended,  and 
which  would  consist  in  the  adoption  of  a  gold  standard,  .  .  198 

CHAP.  IX. — Appreciation  of  the  system  which  consists  in  adjourning  indefi- 
nitely the  legislative  solution,  .  .  .  .  .  .209 


SECTION  I. 

PRELIMINARY    OBSERVATIONS. 


CHAPTER  I. 

THE     QUESTION    STATED. 

IF  we  go  back  in  imagination  three  centuries,  and  picture 
to  ourselves  the  most  striking  characteristic  which  the 
aspect  of  Europe  then  presented,  we  shall  behold  a  uni- 
versal excitement  caused  by  the  discovery  of  a  new  conti- 
nent, which  had  been,  sixty  years  previously,  brought  to 
light  by  a  Genoese  navigator,  whose  genius  and  persistent 
daring  had  been  stimulated  by  a  lucky  miscalculation  of 
the  geographical  position  of  China.  In  this  new  world, 
to  which  Columbus  had  traced  the  path — not  merely  for 
Castille  and  Leon,  as  is  alleged  in  the  inscription  placed 
on  his  tomb  by  the  tardy  gratitude  of  posterity,  but  for 
the  whole  civilized  world — mines  of  gold  and  afterwards 
of  silver  (especially  the  latter),  of  unheard  of  richness, 
presented  themselves  to  the  cupidity  of  the  conquerors. 
The  most  enterprising  spirits  of  the  Iberian  peninsula 
hastened  across  the  ocean  to  possess  themselves  of  treas- 
ures, the  splendour  of  which  had  been  exaggerated  in 
their  excited  imaginations  ;  and  they  were  followed  by  a 
multitude  of  daring  adventurers  from  all  parts  of  Europe, 


16 


PRELIMINARY    OBSERVATIONS. 


who  precipitated  themselves  on  the  coast  of  America,  all 
in  quest  of  mines  of  gold  and  silver. 

It  was  in  Peru  and  Mexico,  the  provinces  containing 
the  richest  mines  and  the  greatest  supply  of  labour,  that 
the  precious  metals  were  first  obtained  by  an  organised 
system  of  production.  From  1492,  the  year  of  the  dis- 
covery of  the  New  World,  to  1500,  it  is  doubtful  whether 
it  yielded  on  an  average  a  prey  of  more  than  1,500,000 
francs  (£60,000)  a  year.  From  1500  to  1545,  if  we  add 
to  the  treasure  produced  from  the  mines,  the  amount  of 
plunder  found  in  the  capital  of  the  Montezumas,  Tenoch- 
titlan  (now  the  city  of  Mexico),  as  well  as  in  the  tem- 
ples and  palaces  of  the  kingdom  of  the  Incas,  the  gold 
and  silver  drawn  from  America  did  not  exceed  an  average 
of  sixteen  million  francs  (£640,000)  a  year.  From  1545, 
the  scene  changes.  In  one  of  the  gloomiest  deserts  on 
the  face  of  the  globe,  in  the  midst  of  the  rugged  and  in- 
hospitable mountain  scenery  of  Upper  Peru,  chance  re- 
vealed to  a  poor  Indianj  who  was  guarding  a  flock  of 
llamas,  a  mine  of  silver  of  incomparable  richness.  A 
crowd  of  miners  was  instantly  attracted  by  the  report  of 
the  rich  deposits  of  ore  spread  over  the  sides  of  this  moun- 
tain of  Potocclil — a  name  which  for  euphony  the  Euro- 
pean nations  have  since  changed  to  Potosi.  The  expor- 
tation of  the  precious  metals  from  America  to  Europe 
now  rose,  rapidly,  to  an  amount  which  equalled,  weight  for 
weight,  sixty  millions  of  francs  (£2,400,000)  of  our  day, 
and  it  afterwards  rose  even  to  upwards  of  eighty  millions. 
At  that  time  such  a  mass  of  gold  and  silver  represented  a 
far  greater  amount  of  riches  than  at  present.  Under  the 
influence  of  so  extraordinary  a  supply,  the  value  of  these 
precious  metals  declined  in  Europe,  in  comparison  with 
every  other  production  of  human  industry,  just  as  would 
be  the  case  with  iron  or  lead,  if  mines  were  discovered 
which  yielded  those  metals  in  superabundance,  as  com- 


PRELIMINARY    OBSERVATIONS.  17 

pared  with  their  present  consumption,  and  at  a  much  less 
cost  of  labour  than  previously,  just  in  fact  as  occurs  in 
the  case  of  manufactures  of  every  kind,  whenever,  by 
improved  processes,  or  from  natural  causes  of  a  novel  kind, 
they  can  be  produced  in  unusual  quantities,  and  at  a 
great  reduction  of  cost. 

This  fall  in  the  value  of  gold  and  silver,  in  comparison 
with  all  other  productions,  revealed  itself  by  the  increased 
quantity  of  coined  metal  which  it  was  necessary  to  give  in 
exchange  for  the  generality  of  other  articles.  And  it  was 
thus  that  the  working  of  the  mines  of  America  had  neces- 
sarily for  effect  a  general  rise  of  prices,  in  other  words,  it 
made  all  other  commodities  dearer.* 

The  fall  in  the  value  of  the  precious  metals,  or  that 
which  means  the  same  thing,  the  general  rise  of  prices, 
does  not  appear  to  have  been  very  great,  out  of  Spain,  till 
after  the  middle  of  the  16th  century.  Shortly  after  the 
commencement  of  the  17th  century,  the  effects  of  the  pro- 
ductiveness of  the  new  mines  and  of  the  diminished  cost 
of  working  them  were  realised  in  all  parts  of  Europe- 
For  the  silver,  which  had  been  extracted  in  greater  pro- 
portion than  the  gold,  and  on  more  favourable  terms,  the 
fall  in  value  had  been  in  the  proportion  of  1  to  3.  In 
transactions  where  previously  one  pound  of  silver,  or  a  coin 
containing  a  given  quantity  of  this  metal,  had  sufficed, 
henceforth  three  were  required.f  At  Paris  a  quantity  of 

*  This  phenomenon,  sufficiently  clear  in  itself,  will  be  still  further  ex- 
plained in  Chapter  III.  of  Section  II. 

f  In  assigning  this  proportion,  it  is  hardly  necessary  to  say  that  I  assume 
other  things  to  be  equal ;  I  mean  that  other  articles  were  in  the  same  abun- 
dance, and  produced  under  the  same  circumstances  as  before.  For  a  com- 
modity which  might  have  become  relatively  more  abundant,  and  of  which 
the  process  of  production  should  have  been  improved,  there  would  have ' 
been  a  cause  for  the  reduction  of  price,  and  this  cause  would  have  to  a  cer- 
tain extent  counterbalanced  the  dearness  caused  by  the  fall  in  the  value  of 
the  metals  from  which  money  is  coined. 

2 


18 


PRELIMINARY    OBSERVATIONS. 


wheat,  which  we  now  call  a  hectolitre,  cost,  before  the 
voyage  of  Columbus,  from  12  to  15  grammes  weight  of 
silver,  which  is  the  metal  contained  in  from  2  francs  67 
centimes  to  3fr.  33c.  (2s.  6d.  to  2s.  9d.)  This  quantity 
was  henceforth  worth  at  least  from  45  to  50  grammes,  or 
the  silver  contained  in  from  10  to  11  francs  and  upwards 
(of  our  money,  8s.  4d.  to  9s.  2d.)  ;  it  was  even  much  high- 
er, for  some  time,  at  Paris,  after  the  first  quarter  of  the 
17th  century.  The  change  in  gold,  although  obvious,  was 
not  so  great  as  in  silver. 

After  having  been  arrested  for  awhile  in  this  down- 
ward course,  and  even  after  having  witnessed  for  a  time  a 
tendency  to  an  upward  movement,  the  fall  in  the  value 
of  the  precious  metals,  and  the  corresponding  rise  in  prices, 
resumed  their  course,  under  the  influence  of  the  same 
causes,  until  towards  the  end  of  the  18th  century,  without 
however  manifesting  their  influence  so  widely  or  intensely 
as  had  been  witnessed  after  the  first  development  of  the 
great  American  mines.  We  find,  as  the  result,  that  dur- 
ing the  first  half  of  the  19th  century,  the  value  of  silver 
fell  to  about  the  sixth  of  what  it  was  before  the  discovery 
of  America,  when  compared  with  the  price  of  corn,  which 
people  have  agreed,  somewhat  arbitrarily  it  must  be  con- 
fessed, to  take  for  a  fixed  measure  of  value.  The  hectoli- 
tre has  sold  on  an  average,  during  this  half  century,  at 
Paris,  for  about  20  francs  (16s.  8d.),  or  90  grammes  of 
silver. 

In  our  day  we  seem  destined,  like  our  fathers  of  three 
centuries  ago,  and  from  the  same  causes,  to  witness  the 
spectacle,  or  in  other  words  the  shock  and  crisis,  of  a  uni- 
versal rise  in  prices  ; — with  this  difference,  however,  that 
up  to  the  present  time  the  new  discoveries  affect  only  the 
production  of  one  of  the  precious  metals,  gold,  of  which 
vast  deposits  of  immense  richness  hitherto  unknown  have 
been  successively  discovered  and  attacked  with  astonish- 


PRELIMINARY    OBSERVATIONS.  19 

ing  impetuosity.  In  California.,  in  the  very  year  when  the 
rule  of  an  industrious  people,  full  of  energy  and  intelli- 
gence, superseded  the  drowsy  authority  of  a  handful  of 
monks  maintained  there  by  Mexico,  splendid  mines  of  gold 
were  opened  upon  the  banks  and  in  the  beds  of  rivers 
watering  the  valley  in  which  San  Francisco  is  situated^ 
and  no  sooner  were  they  heard  of  than  they  were  vigorous- 
ly assailed  by  crowds  of  settlers  who  threw  themselves 
headlong  upon  the  spot  from  all  parts  of  the  world.  This 
was  in  1848.  In  three  years  more,  beyond  the  great 
ocean,  the  continuation  of  the  magnificent  mines  of  Cali- 
fornia was  discovered  in  Australia.  In  that  remote  region, 
a  gold-seeker,  who  had  made  his  first  essays  in  the  neigh- 
bourhood of  San  Francisco,  discovered  treasures  not  in- 
ferior to  those  of  the  vaunted  valleys  of  the  Sacramento, 
and  the  San  Joaquini.  But  California  and  Australia  do 
not  contain  the  only  rich  mines  towards  which  the  civiliz- 
ed world  of  our  day  have  stretched  forth  an  active  and 
greedy  hand.  It  is  about  thirty  years  ago  that  those 
auriferous  slopes,  known  to  the  ancients,  and  revealed  to 
us  in  a  narrative,  fabulous  though  it  be,  by  the  father  of 
history,  but  forgotten  by  the  generations  who  succeeded 
him,  began  to  give  forth  a  notable  supply  of  gold  in 
Northern  and  Eastern  Kussia,  among  the  Oural  Moun- 
tains, and  especially  in  Siberia,  where  the  field  of  enter- 
prise is  almost  boundless.  The  gold  regions  of  the  Em- 
pire of  Russia,  of  which  Herodotus  had  given  us  a  descrip- 
tion, tinged  with  the  dreams  of  romance,  were  only  re-dis- 
covered by  the  moderns  in  1774.  It  was  in  the  chain  of 
the  Oural  that  the  first  discovery  was  made,  and  to  which 
the  workings  were  confined  till  a  very  recent  year.  The 
riches  of  these  mines  were,  however,  but  slightly  developed 
till  after  1810.  In  1816,  the  production  was  only  about 
96  kilogrammes  of  metal  (£13,440).  From  1823  a  pro- 
gressive increase  took  place.  In  1830,  the  production  ac- 


20  PRELIMINARY    OBSERVATIONS. 

cording  to  official  accounts  was  5,779  kilogrammes.,  or 
about  18  millions  of  francs  (£720,000).  About'  this 
time,  the  auriferous  deposits  of  Siberia  became  known, 
and  from  1840  they  yielded  afar  greater  mass  of  gold  than 
that  extracted  from  the  mines  of  the  Oural. 

Under  the  influence  of  this  greatly  increased  and 
cheapened  production  of  gold,  it  is  reasonable  to  expect, 
at  least  in  all  those  countries  where  gold  circulates  in  large 
quantities,  and  where  it  is  or  tends  to  be  the  sole  medium 
of  exchange,  a  general  disturbance  of  prices,  a  deeply  felt 
derangement  of  interests,  and  a  modification  more  or  less 
radical  in  the  different  relations  of  society.  To  examine 
the  causes  and  consequences  of  such  a  revolution,  and  the 
good  or  the  evil  which,  if  they  have  not  already  com- 
menced, must  hereafter  spring  from  it,  can  hardly  be 
deemed  an  unprofitable  task.  With  reference  to  certain 
countries,  and  more  especially  France,  it  is  well  to  consid- 
er how  far  this  influx  of  gold  into  the  monetary  system  is 
in  conformity  with  existing  laws,  with  the  intentions  of 
the  legislator,  the  national  honour,  and  the  respect  due  to 
engagements  contracted  by  the  State.  If  it  were  proved 
that  what  is  taking  place  is  in  violation  of  the  spirit  and 
letter  of  legislation,  the  best  means  should  be  sought  for 
returning  as  quickly  as  possible. to  the  scrupulous  observ- 
ance of  the  law. 

The  work  which  I  offer  to  the  judgment  of  the  public 
will  naturally  divide  itself  under  different  heads.  In  the 
first  place  let  us  try  to  form  an  idea  of  the  chances  of  a 
rise  in  prices,  of  the  forces  which  tend  to  produce  that  re- 
sult, and  of  those  which  are  calculated  to  prevent  it ;  and 
next  let  us  see  in  what  sense  we  ought  to  understand  the 
monetary  legislation  of  France,  and  what  steps  should 
succeed  to  the  solution  of  this  problem.  Afterwards,  we 
will  pass  to  a  brief  explanation  of  the  principal  incon- 
veniences which,  in  a  political  and  social,  as  well  as  in  an 


PRELIMINARY    OBSERVATIONS.  21 

economical  point  of  view,  will  attend  a  general  rise  of 
prices,  caused  by  the  depreciation  of  gold,  as  well  as  of  the 
advantages  which  society  and  the  State  may  derive  from 
such  a  depreciation  to  compensate  for  the  disorganisation 
it  must  occasion.  We  shall  conclude  with  an  attempt  to 
decide  what  arrangements  will  be  proper  for  preventing  or 
diminishing  the  evil  effects  of  an  extraordinary  production 
of  the  precious  metal. 

Simultaneously  with  these  new  discoveries  of  gold,  a 
fact  of  grave  import  develops  itself  with  reference  to  silver. 
For  a  few  years  past  this  metal  has  become,  in  the  Eu- 
ropean market,  the  object  of  unusual  demand  for  exporta- 
tion to  the  East.  This  is  evidently  calculated  to  make 
the  fall  in  gold  more  sensibly  felt,  especially  in  comparison 
with  the  other  precious  metal ;  for  whilst  the  gold  in- 
creases rapidly,  silver  becomes  more  scarce,  and  thus  the 
divergence  operates  from  both  sides.  We  could  not  dis- 
pense with  a  brief  investigation  of  the  change  going  on  in 
the  demand  for  silver,  were  it  only  to  endeavour  to  esti- 
mate its  probable  duration,  and  to  form  an  idea  of  the  in- 
fluence which  it  is  likely  to  exercise  upon  the  fall,  ap- 
parent or  real,  in  the  value  of  gold.  The  natural  course 
of  this  work  will  soon  furnish  an  occasion  for  this  investi- 
gation. 


CHAPTER  II. 

PEELIMtNAEY  OBSEEVATIONS  ON  THE  EISE  OF  PEICES  WHICH    HAS 
CHAEACTEEISED  THE  LAST  FEW  YEAES. 

BEFORE  entering  upon  the  consideration  of  the  mode  in 
which  the  new  gold  discoveries  must  be  considerd  as  the 
probable  cause  of  the  general  rise  of  prices,  in  the  coun- 
tries where  gold  is  by  law  or  practice  the  monetary 
standard,  it  may  not  be  out  of  place  to  say  a  few  words  in 
order  to  avert  a  possible  confusion.  This  dearness  is  not 


22  PRELIMINARY    OBSERVA: 

a  fact  appertaining  to  a  future  more  or  less  distant  ;  the 
present  time  is  characterised  by  an  all  but  universal  rise 
of  prices,  at  least  it  has  been  so  up  to  the  reaction  which 
dates  from  the  close  of  1857.  There  are  few  productions 
which  had  not  risen  in  price  during  the  last  five  or  six 
years.  Even  after  the  violent  crisis  winch  shook  the  four 
quarters  of  the  globe,  the  high  prices  of  several  articles 
are  still  sustained.  Many  persons  have  not  hesitated  to 
attribute  this  unyielding  rise  to  the  influence  of  the  new 
gold  mines.  I  do  not  deny  that  the  unusual  production 
of  this  metal  may  have  been  in  part  the  cause  ;  but  other 
causes  may  be  mentioned  which  have  weighed  considerably 
in  the  scale. 

Speaking  of  a  great  number  of  productions  of  the  first 
necessity,  of  the  raw  materials  of  industry,  and  conse- 
quently of  manufactured  articles,  especially  of  those  upon 
which  the  price  of  the  raw  material  exercises  the  greatest 
influence — they  are  in  general  the  commonest  qualities — 
we  may  trace  a  rise  in  price  quite  distinct  from  that  which 
could  have  arisen  from  an  increased  production  of  gold. 
It  arises  from  the  fact  that,  in  the  case  of  these  raw  mate- 
rials or  manufactures,  the  relation  between  the  supply  and 
demand  in  the  market,  which  necessarily  decides  the  price, 
has  undergone  a  great  change.  The  demand  having  sur- 
passed the  supply,  the  consumer  has  found  himself  placed 
at  the  great  disadvantage  of  being  obliged  to  buy  in  a 
dearer  market.  This  rise  in  prices,  special  and  distinct 
in  its  origin,  must  be  attributed  to  causes  which  in  their 
effects  at  least,  if  not  in  their  very  nature,  are  transitory. 

In  the  first  place  it  may  be  traced  to  the  fact  that 
various  classes  of  society  have  indulged  in  an  increased 
consumption,  either  from  their  having  greater  resources,  or 
from  their  habits  of  economy  having  undergone  an  unfa- 
vourable change.  In  France  a  great  number  of  persons 
have  been  enriched  by  the  immense  rise  in  the  value  of 
railway  shares,  and  they  have  set  an  example  of  extrava- 


PRELIMINARY    OBSERVATIONS.  23 

gance  which  has  not  wanted  imitators.  As  respects  the 
working  classes,  the  impulse  given  to  public  works,  and  to 
various  industrial  undertakings,  has  caused  an  extraordi- 
nary demand  for  their  labour,  and  the  consequent  increase 
in  their  wages  has  enabled  them  to  consume  a  greater 
quantity  of  certain  articles  of  subsistence,  and  of  those 
manufactured  products  which  are  most  accessible  to  the 
masses  of  mankind.  One  of  the  effects  traceable  to  this 
cause  is  the  high  price  of  butcher's  meat  which  we  have 
lately  witnessed  in  France. 

In  the  next  place  the  moderate,  not  to  say  the  inferior 
harvests,  have  in  later  years  been  a  sufficient  reason  for  the 
high  price  of  many  articles.  Bread  and  wine  have  risen 
because  of  the  scarcity  of  corn,  and  of  the  disease  which  has 
ravaged  our  vineyards.  The  rise  in  bread  has  produced  a 
similar  effect  upon  other  articles  of  ordinary  subsistence.  A 
raw  material,  in  great  use  among  the  manufacturers  of 
Europe,  silk,  is  one  of  the  objects  which  have  undergone  the 
greatest  advance ;  and  this  also  has  arisen  from  a  failure  of 
the  crop  in  the  Western  World.  This  has  been  sufficient 
to  account  for  the  high  price  of  the  woven  fabrics,  for  the 
cost  of  the  raw  material  is  a  principal,  if  not  the  very  first 
element,  in  the  price  of  silk  goods. 

Moreover,  it  cannot  be  doubted  that  a  spirit  of  wild 
speculation  has  spread  itself  more  or  less  throughout  the 
commercial  world,  and  that  this  has  not  been  without  its 
effect  upon  the  prices  of  some  commodities. 

I  only  allude  to  these  circumstances  lest  we  should  con- 
found the  effects,  which  must  be  regarded  as  accidental 
and  transient,  with  the  results  produced  by  the  new  dis- 
coveries of  gold. 

In  the  following  pages,  I  shall  generally  reason  as  if 
these  new  gold  mines  had  not  yet  produced  any  appreci- 
able effect.  I  trust  I  shall  not  be  blamed  for  this  reserve. 
It  strikes  me  that  it  will  not  weaken  the  conclusion  to 
which  this  work  will  lead, — but  have  a  contrary  effect. 


SECTION  II. 

AN  APPEAL  TO  SOME  OF  THE  FUNDAMENTAL 
NOTIONS  UPON  THE  NATURE  AND  CHARAC- 
TERISTICS OF  MONEY. 


CHAPTER    I. 

WHAT  WE  OUGHT  TO  UNDEESTAND  BY  VALUE  AND  PEICE.— TWOFOLD 
DEFINITION  OF  MONEY.— THE  STANDAED  OE  FINENESS  OF  MONEY. 

In  order  to  clear  the  ground  as  much,  as  possible,  it  may 
be  well,  before  entering  further  upon  our  task,  to  call  at- 
tention to  some  fundamental  notions  upon  the  subject  of 
money,  which  may  be  found  more  or  less  ably  expounded 
in  almost  every  treatise  upon  political  economy.  I  repeat 
them  here,  however,  that  I  may  spare  such  of  my  readers 
as  have  not  these  writings  fresh  in  their  recollection,  the 
trouble  of  referring  to  some  special  work  for  information.* 

*  We  know  that  France  is  of  all  the  countries  of  Europe,  or  of  Christen- 
dom, that  in  which  political  economy  is  the  least  taught.  There  are  but 
two  professorships  :  the  one  public,  that  of  the  College  of  France,  and  the 
other  restricted  to  a  special  class  of  functionaries  attached  to  the  school  of 
the  Board  of  Works.  Everywhere  else,  whether  in  Europe  or  America, 
each  university  has  at  least  one  chair  of  political  economy ;  this  will  be 
found  equally  in  Russia  and  in  England,  in  Prussia  and  in  Spain.  The  little 
kingdom  of  Portugal  supports  three  professors  of  political  economy.  In 
France,  instead  of  extending,  we  seem  to  be  curtailing  this  useful  branch  ol 
instruction.  The  chair  of  industrial  economy,  which  was  filled  with  such 
success  by  M.  Blanqui,  at  the  Conservatoire  des  Arts  et  Metiers,  and  which, 


NATURE  AND  CHARACTERISTICS  OF  MONEY.     25 

Gold  and  silver  are  articles  of  commerce,  that  is  to  say, 
objects  having  relations  to  our  wants,  and  which  are  bought 
and  sold.  Like  all  other  commodities,  they  have  their 
own  peculiar  value  for  which  they  are  in  request ;  and 
this  demand,  arising  from  their  utility,  combined  with  the 
circumstances  of  their  production,  and  particularly  of 
their  quantity,  determines  their  value. 

Let  it  here  be  observed  that  value  is  a  word  the  mean- 
ing of  which  is  relative,  inasmuch  as  the  attribute  to 
which  it  relates  always  implies  a  comparison.  If  I  say 
that  meat  is  worth  twice  as  much  as  bread,  I  establish  a 
relation  between  these  two  articles  ;  and  in  thus  express- 
ing myself  I  compare  meat  with  bread. 

When  we  speak  of  the  value  of  an  object,  we  ought, 
for  the  sake  of  a  rigorous  precision  in  expressing  our 
meaning,  to  point  out  the  other  object  with  which  we 
compare  it.  It  is  true,  that  very  often  it  is  understood 
that  we  compare  it  with  the  generality  of  other  commod- 
ities ;*  or  pretty  frequently,  indeed,  it  is  the  price  that 
is  meant. 

The  price  of  a  certain  thing  is  its  value  in  relation  to 
a  substance  specially  designated,  that  is  to  say,  to  the 
material  of  which  money  is  made.  Thus,  whilst  in  ordi- 
nary language  we  often  confound  these  two  words,  value 
and  price,  and  use  them  as  synonymous  terms,  they  have 
in  reality  a  distinct  meaning.  Both  have  a  relative 
sense  ;  but  value  is  a  more  general  and  indeterminate  ex- 

as  its  title  indicates,  was  devoted  to  but  one  branch  of  political  economy, 
has  been  suppressed  since  the  death  of  that  brilliant  professor.  Another 
chair  has  been  founded  in  its  place,  but  it  has  been,  by  an  accident  no 
doubt,  filled  by  a  person  whose  chief  claim  to  public  attention  consists  in 
the  propensity  he  has  shown  to  throw  insults  on  political  economy  and 
those  who  study  it. 

*  It  is  this  meaning  which  must  be  nearly  always  accepted  in  the  course 
of  the  following  arguments. 


26 


NATURE    AND    CHARACTERISTICS    OF   MONEY. 


pression,  or  to  use  a  better  word,  more  vague  ;  price  is 
more  special,  and  has  a  meaning  perfectly  precise.* 

Money  is  a  certain  commodity  out  of  which  we  create 
an  instrument  that  serves,  in  exchanges,  as  a  common 
measure  of  value,  because  it  is  with  it  that,  in  transac- 
tions, all  other  commodities  are  compared.  But  it  is  not 
merely  a  measure  ;  it  figures  in  exchanges  in  another 
capacity,  that  of  a  material  recompense  or  equivalent. 
The  twenty  francs  with  which  a  hectolitre  of  wheat  can 
ordinarily  be  bought,  and  which  are  also  at  the  present 
moment  the  price  of  a  hectolitre  of  common  wine  in  many 
departments,  give  me  the  measure  of  the  value  of  the 
wheat  and  wine,  as  compared  with  other  commodities  of 
which  the  price  is  known  ;  but  they  do  more,  they  serve, 
at  the  moment  of  the  transaction,  and  in  the  market 
where  it  takes  place,  as  an  equivalent  for  the  hectolitre 
of  wheat  or  the  hectolitre  of  wine.  We  must,  therefore, 
guard  ourselves  from  viewing  money  as  simply  and  purely 
a  representative  sign  of  value,  although  this  meaning  is 
sanctioned  by  usage  in  nearly  every  class  of  society. 
Money  is  not  a  sign  ;  each  piece  of  money  is  a  certain 
fixed  quantity  of  a  definite  fineness,  very  real  and  very 
effective,  of  the  metal  of  which  money  is  made  ;  and  it  is 
no  more  true  to  say  that  the  twenty  francs  are  the  sign 
of  the  hectolitre  of  wheat  or  the  hectolitre  of  wine,  than  it 
would  be  to  pretend  that  the  hectolitre  of  wheat  or  wine 
is  the  sign  of  the  twenty  francs.  The  definition  of  the 
word  money  which  I  have  given,  namely,  that  it  is  at 
once  a  measure  and  an  equivalent,  is  that  which  is 
acknowledged  by  all  modern  authorities.  It  is  remarka- 

*  On  the  subject  of  the  true  meaning  to  be  attached  to  the  word  value,  I 
entreat  the  reader  to  consult  a  work  of  the  highest  order,  for  which  we  are 
indebted  to  one  whose  premature  loss  the  student  of  political  economy  will 
long  deplore  ; — I  allude  to  the  "  Harmonies  Economiques  "  of  Frederic  Bas- 
tiat. 


NATURE   AND    CHARACTERISTICS    OF    MONEY.  27 

ble  that  it  should  agree  exactly  with  that  which  Aristotle 
has  given  us. 

"  It  was  agreed/'  says  he,  "  to  give  and  to  receive  a 
substance  which,  useful  in  itself,  was  easily  transferred 
from  hand  to  hand  in  the  ordinary  transactions  of  life  ; 
it  was  iron,  for  instance,  or  silver,  or  some  other  substance 
of  which  the  size  and  weight  were  in  the  first  place  deter- 
mined, and  on  which,  to  escape  from  the  inconvenience  of 
continual  measurings,  a  particular  stamp  was  affixed  as  a 
sign  of  its  value."'::" 

From  the  moment  that  man  forms  a  society — and  how 
can  we  conceive  it  otherwise  ? — money  becomes  necessary 
to  him.  The  division  of  labour,  by  which  the  sociability, 
as  well  as  the  different  aptitudes,  of  mankind  is  mani- 
fested, has  existed  ever  since  a  few  individuals  were 
grouped  together,  and  it  has  been  developed  in  proportion 
to  the  progress  of  civilisation.  It  subjects  man  to  the 
necessity  of  exchanging,  incessantly,  the  material  products 
of  his  labour,  or  the  services  which  he  is  in  a  position  to 
render,  against  the  productions  and  the  services  of  others. 
If  money  did  not  exist,  this  exchange  could  only  be  car- 
ried on  by  barter.  The  man  who  had  harvested  his  corn, 
and  was  in  want  of  a  pair  of  shoes,  would  be  obliged  to 
seek  a  shoemaker  who  had  not  supplied  himself  with  corn, 
and  was  willing  to  deal  with  him.  And  even  when  he 
had  found  one,  he  would  have  had  to  bargain  with  him  as 
to  the  proportionate  value  at  which  the  article  of  clothing 

*  Aristotle,  Politics,  Book  I.,  Chap.  III.— This  definition  of  the  word 
money  is  that  which  Lord  Liverpool  has  given  in  his  treatise  "  On  the  Coins 
of  the  Eealm."  He  probably  derived  it  from  a  work  by  Mr.  Harris,  Assayer 
General  of  the  Mint,  which  appeared  in  two  parts  in  1757  and  .1758.  This 
valuable  pamphlet,  entitled  "Essay  upon  Money  and  Coins,"  has  just  been 
reprinted  under  the  auspices  of  the  London  "  Political  Economy  Club"  in 
a  volume  of  old  tracts  upon  money,  with  a  preface  by  Mr.  McCulloch,  whose 
eminent  qualifications  are  known  to  all  political  economists.  (For  the  defi- 
nition of  money,  by  Mr.  Harris,  see  p.  370  of  the  above  volume.) 


NATURE   AND    CHARACTERISTICS   OF    MONEY. 

he  wanted,  and  the  corn  he  desired  to  sell,  ought  to  he 
exchanged.  From  the  moment  when,  among  all  kinds  of 
merchandise,  one  article  has  heen  selected  to  serve  as  a 
standard  by  which  the  relative  prices  of  all  others  may  he 
measured,  in  other  words  where  money  is  used,  transactions 
become  simplified  and  facilitated.  "  In  a  system  of  barter," 
says  M.  Koscher,*  "how  difficult  it  would  be  to  find  ex- 
actly the  man  in  a  condition  to  be  able  to  supply  our 
wants,  and  at  the  same  time  to  have  occasion  for  our  super- 
fluities !  How  much  more  rarely  would  it  happen  that 
the  want  and  the  superfluity  met  each  other  in  equal  pro- 
portions, that,  for  example,  the  manufacturer  of  nails,  who 
wished  to  barter  his  goods  for  a  cow,  should  find  a  grazier 
who  had  occasion  for  as  many  nails  as  would  pay  for  a 
cow/'  Again,  says  the  same  writer  : — "  Under  this  sys- 
tem, the  strongest  party,  in  an  economical  sense,  would, 
in  every  bargain,  enjoy  an  advantage  much  greater  than 
he  possesses  at  present ;  the  buyer  of  bread,  for  instance, 
might  be  half-starved  before  he  came  to  terms  with  a 
baker  upon  the  price  of  the  articles  he  had  to  offer  him 
in  exchange." 

When  once  the  use  of  money  is  adopted,  the  grower  of 
corn  exchanges  his  product  for  a  certain  quantity  of  money 
which  is  its  price,  and  with  this  money  he  afterwards  goes 
in  quest  of  any  other  commodity  for  which  he  has  occasion 
to  those  who  make  it  the  object  of  their  industry.  At 
first  view  it  might  seem  that  the  use  of  money  compli- 
cates transactions,  inasmuch  as  it  necessitates  two  ex- 
changes, where  otherwise  there  would  be  but  one  ;  but, 
in  truth,  its  use  is  of  enormous  advantage,  and  we  should 
take  an  immense  step  backwards  in  civilisation  if  we  were 
to  return  to  barter.  It  has  been  wisely  said  that  there  is 

*  Principles  of  Political  Economy;    translated,   with  notes,   by  M. 
Wolowski,  Book  II.,  Chapter  III 


NATUKE    AND    CHARACTERISTICS  OF    MONEY.  29 

no  machine  which  economises  labour  like  money,  and  its 
adoption  has  been  likened  to  the  discovery  of  letters. 

Gold  and  silver  were  not,  in  the  earliest  stages  of  so- 
ciety, invested  with  the  attributes  of  money.  In  their 
primitive  communities  men  resorted  for  a  medium  of  ex- 
change to  those  objects  which  were  more  immediately  at 
their  command,  as,  for  example,  cattle.  But  almost  from 
the  very  dawn  of  civilisation  it  was  some  kind  of  metal, 
and  especially  copper,  which  served  the  purposes  of  money. 
In  proportion  as  society  advanced,  first  silver,  and  then 
gold,  became  the  instrument  of  exchange,  and  it  may  be 
said  that,  from  time  immemorial,  these  metals  have  been 
chosen  as  the  preferred  commodities,  the  constant  inter- 
mediaries in  transactions.  For  this  purpose,  they  offer  a 
combination  of  advantages  which  no  other  product  pos- 
sesses to  anything  like  the  same  extent. 

1.  In  the  first  place,  these  commodities  are  very  much 
prized  by  mankind.  2.  Independently  of  the  facility  with 
which  they  can  be  coined,  they  are  more  portable  than 
almost  any  other  products,  that  is  to  say,  within  the  same 
weight  and  volume  they  comprise  a  greater  relative  value. 
3.  Of  all  bodies  they  are  the  most  unalterable.  4.  They 
are  completely  homogeneous,  and  being  substances  simple 
in  their  nature,  their  verification  is  easy.  It  is  even  not 
difficult  to  ascertain  that  which  is  called  the  standard,  in 
other  words  the  degree  of  fineness,  or  the  proportion  which 
each  ingot  contains  of  pure  metal  exempt  from  all  alloy. 
5.  They  are  very  easily  divided,  so  as,  in  case  of  need,  to 
represent  small  values  without  thereby  impairing  any  of 
their  advantages  ;  for  the  detached  pieces  can  be  reunited 
almost  without  expense  ;  and,  on  the  other  hand,  they  can 
be  separated  very  cheaply  from  most  of  the  combina- 
tions into  which  they  can  enter  with  other  substances,  and 
particularly  so  from  their  union  with  other  metals.  6. 
They  are  admirably  adapted  for  receiving  a  delicate  im- 


30 


NATURE  AND  CHARACTERISTICS  OF  MONEY. 


pression,  which  they  faithfully  preserve,  and  this,  added  to 
their  sonorous  quality,  affords  an  almost  infallible  test  by 
which  to  recognise  with  readiness  their  value.  Finally, 
they  are  less  liable  than  other  commodities  to  the  influence 
of  those  causes  which  might  tend  to  lower  or  to  raise  their 
value.  Undoubtedly,  their  value  varies  in  comparison 
with  other  goods,  but  this  almost  always  arises  from  causes 
belonging  to  these,  and  is  not  attributable  to  motives 
originating  with  themselves. 

Originally,  in  the  operations  of  buying  and  selling,  the 
quantity  of  gold  or  silver  delivered  by  the  buyer  of  a  com- 
modity to  the  seller  was  weighed  by  the  parties.  After- 
wards, to  simplify  and  shorten  transactions,  certain  discs 
of  unvarying  size  were  invented,  containing  quantities  of 
metal  fixed  by  law,  which,  by  being  struck  or  moulded, 
received  an  official  stamp  serving  for  a  public  voucher  of 
the  weight  of  fine  metal  contained  in  each  piece  of  money. 
For  a  long  succession  of  ages,  all  the  nations  of  the 
West  have  adopted  this  system  in  the  constitution  of  their 
currency,  whilst,  on  the  contrary,  the  most  populous  and 
the  most  civilised  nation  of  the  East  has  remained  faithful 
to  the  old  system  of  weighing, — the  same  as  was  practised 
by  the  patriarch  Abraham,  when  he  paid  for  his  burial 
ground  ;  by  King  Priam,  when  he  ransomed  the  body  of 
his  son  Hector  from  Achilles ;  and  by  the  ancient  Egyp- 
tians. Nevertheless,  in  China,  of  which  I  was  about  to 
speak,  to  give  to  the  operations  of  commerce  a  security 
which  the  process  of  weighing  in  the  time  of  Abraham  did 
not  sufficiently  afford,  since  there  was  no  assurance  there 
that  the  pieces  of  metal  put  into  the  scales  were  absolutely 
pure,  or  of  a  known  degree  of  purity,  another  process  has 
been  added.  The  metal  is  tested  by  an  assayer,  by  which 
means  the  quality  as  well  as  quantity  of  each  ingot  or 
fragment  is  known.  In  a  word,  in  every  commercial 
transaction  in  China,  the  metal  counts  botJi  for  its  quan- 


NATURE   AND    CHARACTERISTICS   OF    MONEY.  31 

tity  and  fineness.  The  various  pieces  of  silver  which  there 
pass  from  hand  to  hand  are  ingots  of  a  certified  weight  and 
fineness  like  our  own  money ;  but  there  is  this  difference,  that 
with  the  Chinese  the  certificate  of  quality  and  quantity 
emanates  from  individuals,  whereas  in  Europe  it  comes 
from  the  government,  and,  moreover,  in  China  the  weight 
and  standard  are  variable  from  ingot  to  ingot,  whilst  in 
every  country  of  Europe  they  are  fixed  for  each  descrip- 
tion of  coin. 

Let  us  insist  upon  this  truth,  which  may  be  given 
for  another  definition  of  money — a  definition  that  can 
hardly  be  kept  too  much  in  mind,  for  it  carries  with  it  the 
refutation  of  many  sophisms  which  have  borne  disastrous 
fruits  in  times  past,  and  which  some  persons  would  still 
like  to  revive  from  the  oblivion  in  which  they  appeared  to 
be  buried  :  pieces  of  money  are  merely  ingots  of  uniform 
weight  and  fineness  for  each  description  of  coin,  and  certi- 
fied as  such  by  government,  by  means  of  an  impression 
which  it  stamps  upon  them.  They  are  so  much  and  no 
more.  Government  places  its  mark  on  them  in  order  to 
attest  their  uniformity,  but  there  its  mission  and  its  duty 
end.  The  form  which  it  gives  them,  the  effigies  and  in- 
scriptions with  which  they  are  impressed,  are  of  precisely 
the  same  character  as  the  marks  stamped  upon  silver 
plates  or  spoons,  and  which  are  a  guarantee'-'  that  the 
government  has  verified  its  fineness. 

*  It  has  been  the  custom  for  governments  to  levy  a  tax  on  plate  and 
jewellery,  in  addition  to  the  cost  of  affixing  these  stamps  ;  but  for  the  con- 
venience of  commerce  it  is  necessary  that  nothing  of  the  kind  should  take 
place  in  the  case  of  money,  and  all  the  civilised  states  of  our  day  recognise 
this  principle  and  act  upon  it. 


32 


NATURE    AND    CHARACTERISTICS    OF    MONEY. 


CHAPTER    II. 

.X 

OF  THE  MEANING  OF  THE  WOED  STANDARD.— THE  METAL-STANDAED 
IS  THAT  FEOM  WHICH  IS  DEEIVED  THE  MONETAEY  UNIT.— THE 
TWO  IDEAS  STANDAED  AND  MONETAEY  UNIT  IMPLY  EACH  THE 
OTHEE. 

IN  the  preceding  chapter  the  reader  may  have  remarked 
the  expression  the  matter,  or  the  substance  of  wliicli  money 
is  made.  Nevertheless,  in  most  countries,  it  is  not  of  one 
material  that  money  is  made  ;  but  pieces  of  gold  and  sil- 
ver circulate  together  indiscriminately.  Yet  it  must  not 
from  that  be  assumed  that  the  two  metals,  gold  and  silver, 
figure  in  the  monetary  system  with  the  same  prerogatives. 
We  are  about  to  call  attention  to  a  word  of  which  it  is 
important  to  fix  the  meaning, — I  mean  the  term,  standard. 

On  this  subject  it  is  necessary  to  guard  ourselves 
against  a  certain  confusion  of  language.  Some  persons 
apply  the  name  of  monetary  standard  to  pieces  of  a  metal 
to  indicate  that  they  cannot  be  refused  in  payment. 
That  is  not  the  way  in  which  the  word  standard  will  be 
employed  in  the  course  of  this  work,  nor  is  it  its  legitimate 
meaning.  When  it  is  the  privilege  of  a  metal  that  the 
coins  of  which  it  is  made  cannot  be  refused  in  payment, 
it  is  because  it  is  endowed  with  the  attribute  of  legal  ten- 
der, which  is  very  different  from  that  of  the  standard. 

When  it  is  said  that  such  or  such  a  metal  is  the  stand- 
ard, it  means  that  the  monetary  unit  is  a  certain  weight, 
settled  once  for  all,  of  this  metal,  which  is,  however,  quite 
reconcileable  with  a  state  of  things  where  coins  of  another 
metal  might  be  equally  a  legal  tender.  Thus  in  France, 
at  the  present  time,  gold  is  a  legal  tender,  although  sil- 
ver alone  is  the  standard,  and  constitutes  the  sole  mone- 
tary unit. 

In  a  word,  standard  and  monetary  unit  are  terms 
allied  in  the  closest  manner  to  each  other,  and  they  are 


NATURE    AND    CHARACTERISTICS    OF    MONEY.  33 

synonymous  the  one  with  the  other,  as  far  as  the  materials 
of  which  a  thing  is  made  can  be  confounded  with  the 
thing  itself.  Beyond  that  the  word  standard  has  but  a 
vague  meaning,  and  its  indecisiveness  may  give  rise  to  all 
sorts  of  errors  and  misunderstandings.  Let  it  be  added 
'that,  in  questions  of  money,  mistakes,  when  sanctioned 
by  government,  resolve  themselves  of  necessity  into  inju- 
ries, falling  on  this  or  that  legitimate  interest, — into 
injustice  and  iniquity  more  or  less  disastrous-  in  its  con- 
sequences. 

The  most  rigorously  exact  meaning,  perhaps,  of  the 
word  standard  would  be  to  say  that  it  is  the  monetary 
unit,  the  latter  itself  being  defined  by  the  three  following 
conditions  :  the  metal  of  which  it  is  composed,  its  weight, 
and  its  fineness.  It  is  in  this  sense  that  we  shall  some- 
times use  it  in  the  course  of  the  following  pages ;  but 
more  frequently  it  is  to  the  metal  itself,  constituting  the 
monetary  unit,  that,  for  brevity  of  language,  we  shall 
assign  the  attribute  of  the  standard.  The  circumstances 
themselves,  under  which  we  shall  introduce  the  expression 
standard,  will  render  any  double  meaning  impossible. 

From  the  intimate  and  almost  indissoluble  connection 
that  exists  between  the  idea  of  the  standard  and  the  mon- 
etary unit,  spring  consequences  not  unimportant.  If,  for 
example,  we  observe  the  legislation  of  a  particular  State, 
where,  too-,  the  government  is  fully  alive  to  the  conditions 
essential  to  a  sound  system  of  currency,  in  other  words,  is 
convinced  of  the  necessity  of  having  one  standard,  and 
not  two  ;*  and  if,  in  the  tendency  of  the  laws  thus 
brought  under  our  notice,  we  find  the  institution  of  a 
monetary  unit  expressly  designed  in  such  terms  as  these, — 
such  a  weight  of  such  a  metal,  of  such  a  fineness,  con- 
stitutes this  unit,  doubt  is  no  longer  possible,  it  is  not 

*  This  point  will  be  established  in  Chap.  IY.  of  the  present  Section, 
3 


34 


NATURE  AND  CHARACTERISTICS  OF  MONEY. 


even  permitted ;  the  metal  in  question  is  alone  invested 
with  the  legal  attribute  of  the  standard. 

This  last  observation  may  to  some  persons  seem  like  a 
truism,  which  it  is  superfluous  and  almost  childish  to 
utter,  so  completely  is  it  in  accordance  with  proof.  Yet 
it  will  be  seen,  by-and-bye,  that  it  is  not  so  needless  as  it 
appears,  for  it  has  escaped  the  notice  of  certain  persons 
in  the  controversy  which  is  now  going  on  respecting  the 
monetary  system  of  France. 


CHAPTER   III. 

OF  THE  CHARACTER  OF  EXCHANGES  AS  AFFECTED  BY  THE  INVENTION 
OF  MONEY.— HOW  THE  RISE  AND  FALL  OF  THE  PRECIOUS  METALS 
ARE  MANIFESTED  IN  THE  COURSE  OF  TRADE.— PHENOMENA  OF  THE 
RISE  AND  FALL  IN  COMMODITIES. 

THERE  is  another  point  of  view  in  which  exchanges  have 
been  to  a  certain  extent  modified  by  the  invention  of 
money,  and  which  it  may  not  be  unnecessary  here  to  no- 
tice ;  it  has  permitted  the  postponement  of  payments 
which  were  almost  always  made  promptly  under  the  sys- 
tem of  barter.  Thus  the  door  has  been  opened  to  all 
those  transactions  in  which  credit  performs  its  part.  In 
return  for  what  may  have  been  received  in  the  form  of  a 
variety  of  goods,  or  of  different  services,  a  party  who,  in- 
deed, may  be  a  city,  a  county,  or  a  state,  is  enabled  to 
bargain  to  pay,  after  a  certain  interval,  a  number,  fixed 
at  the  time,  of  pieces  of  money,  that  is  to  say  of  metal. 
In  many  cases,  but  particularly  where  the  contracting 
party  was,  as  has  been  said,  a  city,  a  county,  or  a  state, 
the  engagement  to  pay  has  taken  the  form  of  a  rent  or 
annual  interest,  consisting  of  a  quantity  of  metal  exactly 
agreed  upon.  In  such  a  case,  the  fluctuations  in  value 
which,  owing  to  time  and  circumstances,  the  metal  of 


NATURE   AND    CHARACTERISTICS   OF   MONEY.  35 

which    money  is  made   might   undergo,  would   possibly 
affect  seriously  the  interests  of  the  debtor  or  creditor. 

If  the  value  of  the  metal  declined,  the  creditor  would 
suffer  a  loss  upon  the  quantity  he  had  to  receive  ;  if,  on 
the  contrary,  it  rose,  the  debtor  would  have  to  pay  more 
than  he  had  calculated  upon.  In  this  manner  it  would  seem 
that  the  chances  between  debtor  and  creditor  were  about 
equal.  There  is,  however,  a  general  cause  which  forbids  a 
perfect  equality.  Doubtless  we  are  correct  in  saying  that 
the  precious  metals,  of  which  money  is  made,  are  liable  to 
fluctuations,  which  as  often  raise  as  depress  them  in  value, 
although  in  this  respect  they  possess  a  certain  relative 
stability  which  we  vainly  seek  in  any  other  products  of 
human  industry.  But  there  is  a  general  cause  tending  to 
produce  a  depreciation,  which,  by  its  continuous  action, 
prevails  finally  over  the  accidental  causes  which  create 
fluctuations  in  their  value.  I  speak  of  the  unceasing 
progress  of  the  arts.  The  working  of  the  mines  is  ever  an 
improving  industry,  and  the  same  law  of  progress  applies 
to  the  metallurgic  processes  for  separating  the  metals  from 
the  rude  ore  which  is  extracted  from  the  bowels  of  the 
earth.  If,  therefore,  the  mines  continued  always  of  the 
same  richness,  and  there  were  no  decided  disturbance  in 
the  relation  between  supply  and  demand,  the  cost  price 
of  a  given  weight  of  gold  or  silver  would  constantly  di- 
minish with  the  lapse  of  ages ; — and  since,  at  least  with 
a  great  and  fluctuating  disproportion  between  the  supply 
and  demand,  the  value  of  an  article  varies  pretty  nearly 
in  conformity  with  its  cost  price,  the  value  of  gold  and 
silver  should,  under  this  influence,  experience  a  constant 
decline.  Thence  springs  a  process  of  depreciation  obvi- 
ously disadvantageous  to  the  creditor,  which  operates 
gradually,  or  rather  in  a  series  of  rebounds,  but  against 
which  there  is  no  safeguard  from  the  time  contracts  are 


Ob  NATURE   AND    CHARACTERISTICS   OF    MONET. 

payable  in  gold  and  silver,*  a  custom  now  all  but  univer- 
sal. Here,  at  least,  is  a  reason  why,  in  a  wise  spirit  of 
equity,  we  should  preserve  for  creditors  all  the  favourable 
chances  which  legitimately  belong  to  them. 

It  is  rarely  that  circumstances  occur,  proper  to  the 
two  metals  of  which  money  is  made,  which  in  a  marked 
degree  affect  their  value  ;  they  arise  from  changes  in  the 
conditions  of  their  production,  and  the  consequent  supply 
in  the  market.  It  cannot  be  too  often  repeated  that  the 
very  rarity  of  these  occurrences  is  one  of  the  principal 
reasons  why  gold  and  silver  are  more  suited  than  any 
other  commodities  to  perform  the  part  assigned  to  them 
in  commercial  exchanges.  Still,  circumstances  of  this 
kind  do  recur  at  certain  intervals  with  much  violence. 
The  most  memorable  example  that  can  be  cited  is  that  of 
the  discovery  of  the  mines  of  gold  and  silver  in  America. 
History,  however,  records  a  certain  number  of  similar 
events,  regarding  which  the  reader  is  referred  to  the  works 
that  specially  treat  of  the  matter.f 

The  effects  of  a  rise  or  fall  in  the  precious  metals  are 
displayed  in  a  manner  peculiar  to  themselves,  owing  to 
the  attribute  of  money  with  which  they  are  invested. 
When  it  is  said  that  a  commodity  falls  in  value,  it  means 
that  we  must  give  a  larger  proportion  of  it  than  previously 
to  procure  in  exchange  the  same  quantity  of  any  other  ar- 
ticle of  commerce.  The  price  of  that  article,  whether  it 

*  To  meet  this,  a  plan  has  been  recommended,  and  sometimes  put  in 
force,  of  paying  in  specified  measures  of  corn  instead  of  gold  or  silver, 
where  the  contract  extends  over  a  long  period,  or  where  it  involves  the 
payment  of  perpetual  rents  or  annuities.  These  stipulations  have,  in  some 
instances,  endured  for  centuries  in  England,  and  the  annuitants  interested 
have  derived  great  advantage  therefrom. 

On  this  subject,  Lord  Liverpool's  treatise  may  be  consulted  with  advan- 
tage. He  cites,  in  particular,  some  examples  of  rents  payable  to  colleges  at 
Oxford  and  Cambridge. — (Page  117,  edition  of*1805.) 

f  See  among  others,  the  Principles  of  Political  Economy,  by  M. 
Roscher,  translated  by  M.  Wolowski,  Yol.  I.,  Book  II.,  Chap.  IY.,  p.  338. 


NATURE   AND    CHARACTERISTICS    OF    MONEY.  37 

be  iron,  lead,  corn,  wine,  or  any  other  product,  excepting 
the  metal  or  metals  of  which  money  is  made,  falls  accord- 
ingly ;  for  the  price  of  a  thing  is  its  value,  specially  com- 
pared with  -those  metals,  or,  to  express  differently  the  same 
idea,  it  is  the  number  of  monetary  units  which  it  is  neces- 
sary to  give  in  exchange  for  a  certain  weight  or  volume  of 
another  commodity.  A  diminution  in  the  value  of  the  metal 
from  which  money  is  essentially  coined  is  shown  differently, 
in  this  respect  that  its  price  remains  the  same  ;  but  then 
the  price  of  all  other  commodities,  without  exception, 
rises  if  its  value  compared  with  itself  has  fallen,  and  falls 
if  it  has  risen.  I  say  that  its  price  as  measured  by  itself 
remains  the  same,  since,  for  this  metal,  specially  and  ex- 
clusively, the  price  is  its  value  compared  with  itself.  If, 
for  example,  the  value  of  silver  falls  one  half,  as  the  mone- 
tary unit,  the/rawe  consists,  in  France,  of  four  grammes 
and  a  half  of  silver,*  a  kilogramme  in  weight  of  fine  metal 
will  still  be  worth  222  francs,  22  cents,  because  one  'kilo- 
gramme contains  four  grammes  and  a  half,  222  times  and 
a  small  fraction  ;  but  in  this  case  the  price  of  lead,  iron, 
wheat,  wine,  and  all  other  commodities  will  be  doubled, 
because,  to  obtain  the  same  quantity  of  these  articles,  it 
is  necessary  to  give  double  the  quantity  of  silver. 

*  When  in  the  course  of  this  work  we  speak  of  a  fixed  weight  of  gold  or 
silver,  without  indicating  its  degree  of  fineness,  the  reader  will  be  pleased 
to  bear  in  mind  that  we  mean  those  metals  when  absolutely  pure  and  free 
from  alloy.  It  is  this  which  is  ordinarily  meant  by  the  standard  of  1,000 
milliemes.  We  know  that  the  standard  of  fineness  of  French  coins  is  900 
milliemes,  or  nine-tenths,  that  is  to  say  that  they  contain  one-tenth  of  alloy. 


38     NATURE  AND  CHARACTERISTICS  OF  MONEY. 


CHAPTER  IV. 

ON  THE  POSSIBILITY  OF  CONFEEEING  THE  QUALITY  OF  STANDAEI> 
UPON  TWO  METALS  AT  ONCE. 

INASMUCH  as  money  is  at  the  same  time  a  measure  of 
value  and  an  equivalent,  common  sense  would  seem  to  tell 
us  how  more  than  difficult  it  must  be  to  have  two  monies, 
equally  invariable,  and  permanently  in  use  together  ;  for 
how  could  it  be  possible  for  a  given  quantity  of  merchan- 
dise .to  have  for  equivalent  indiscriminately  a  certain 
quantity  of  gold  and  a  certain  quantity  of  silver,  which 
should  always  bear  the  same  relation  to  each  other,  seeing 
that  there  is  not  and  cannot  be  a  fixed  relation  between 
these  two  metals  ?  The  value  of  gold  and  that  of  silver 
depend,  in  fact,  to  a  large  extent  upon  circumstances  pe- 
culiar to  each  of  them,  they  being  identical  in  this  respect 
with  iron  or  copper,  bread  or  meat.  It  would,  doubtless, 
be  an  exaggeration  to  say  that  they  are  absolutely  inde- 
pendent of  each  other  ;  for  whenever  two  substances  have 
a  common  use,  the  value  of  one  exercises  a  certain  influ- 
ence upon  that  of  the  other  ;  but  between  gold  and  silver 
this  relation  is  not  closer  than  that  between  corn  and 
wine,  or  between  bread  and  meat.  Now,  who  has  ever 
maintained  that  so  close  a  connection  exists  between  these 
two  products  that  the  price  of  one  being  given,  that  of  the 
other  can  thereby  be  determined  ?  It  is  now  a  long  time 
since  Locke  has  said, — "  Two  metals  such  as  gold  and 
silver  cannot  serve  at  the  same  time,  in  the  same  country, 
for  the  medium  of  exchange,  because  this  medium  ought 
to  be  always  the  same  and  retain  the  same  proportionate 
value.  To  adopt,  as  a  measure  of  the  exchangeable  value 
of  commodities,  substances  which  have  not  a  fixed  and  in- 
variable relation  to  each  other,  is  as  if  we  were  to  choose  for  a 


NATURE    AND    CHARACTERISTICS    OF    MONEY.  39 

measure  of  length  an  object  which  was  subject  to  the  pro- 
cess of  distending  and  contracting  itself.  In  each  country 
there  should  be  but  one  rnetal  to  serve  for  the  money  of  ac- 
count, the  payment  of  contracts,  and  the  measure  of  value." 
Even  before  Locke  had  thus  expressed  himself  the 
same  idea  had  presented  itself  to  the  intelligence  of  man- 
kind, and  been  carried  out  in  practice.  At  the  origin  of 
a  metallic  currency,*  it  was  only  one  metal  that  was  en- 
dowed with  the  attribute  of  money.  It  was  not  the  more 
vulgar  of  the  two  to  which  was  always  reserved  the  par- 
ticular appellation  of  the  precious  metals.  It  was  here 
iron,  and  elsewhere  copper.  We  know  that  for  many 
centuries,  copper  constituted  the  money  of  Kome.f  After- 
wards, society  having  become  richer,  copper  money  was 
no  longer  sufficient  ;  with  the  increase  of  wealth,  payments 
became  too  cumbrous,  and  a  more  valuable  metal  than 
copper  was  found  better  adapted  for  the  bulk  of  transac- 
tions ;  it  was  thus  that  silver  money  came  into  use.  This 
was  soon  after  followed  at  Home,  and  for  the  same  reason, 
by  a  gold  currency,  and  thenceforth  the  two  metals  con- 
tinued to  coexist.^  The  history  of  the  currencies  in  the 
monarchies  which  were  reared  upon  the  ruins  of  the  Ko- 
man  Empire  reveals  the  same  process.  The  first  man  of 
genius  who  then  arose,  endowed  with  a  commanding  spirit 
of  reorganization,  Charlemagne,  took  for  his  monetary 

*  In  a  great  many  countries,  metals  were  preceded  as  instruments  of 
exchange  by  other  objects.  Thus,  in  Rome,  we  are  warranted  by  the  very 
word  pecunia  in  believing  that  different  articles  of  merchandise  were  valued 
and  paid  for  in  heads  of  cattle. 

f  The  foundation  of  Rome  dates  from  the  year  753  B.  c.  Silver  money 
was  not  introduced  till  five  centuries  later  (269  B.  c.) 

\  Copper  thenceforth  performed  but  a  subsidiary  part ;  it  did  not,  prop- 
erly speaking,  constitute  money,  that  is  to  say,  both  an  equivalent  and  a 
measure.  With  the  Romans,  as  with  us,  copper  coins  were  thenceforth 
merely  tokens,  inasmuch  as  they  had  a  value  in  exchange  greater  than  their 
intrinsic  value ;  but  then,  as  now,  they  were  merely  used  for  the  smallest 
payments. 


40  NATURE   AND    CHARACTERISTICS   OF   MONET. 

unit  the  pound  weight  of  silver.  A  gold  currency  made 
its  appearance  in  France  under  St.  Louis,  and  from  that 
time  the  two  metals  have,  whether  for  good  or  evil,  circu- 
lated side  by  side  of  each  other.  In  England,  William 
the  Conqueror  established  also  for  his  monetary  unit  the 
pound  of  silver,  of  the  Saxon  or  Tour  weight ;  and  it  was 
only  under  Edward  III.  that  a  gold  currency  was  estab- 
lished. In  the  extreme  East,  at  least  in  China,  silver  has 
from  the  first  continued  to  be  the  sole  instrument  of  ex- 
change for  all  commercial  operations  on  a  great  scale.  In 
India,  silver  is  the  prevailing  money  ;  gold  formerly  filled 
a  secondary  place  in  the  currency  throughout  the  vast 
territories  of  the  East  India  Company,  in  the  form  of 
coins,  bearing  the  name  of  moJiur,  which  had  been  given 
them  by  the  ancient  Moguls  ;  but  at  present  they  have 
been  completely  demonetised  by  the  Company. 

In  itself,  the  desire  to  make  gold  and  silver  circulate 
together  in  the  currency  of  a  State  is  justifiable  upon 
good  reasons,  an  equal  value  of  the  one  being  much  more 
portable  than  the  other  ;  but,  on  the  other  hand,  being 
little  suited  for  small  sums,  owing  to  the  risk  of  the  coins 
slipping  but  of  sight,  a  division  of  their  employment 
seems  to  be  indicated, — for  silver  the  smaller,  and  for 
gold  the  larger  payments,  especially  when  they  pass  from 
hand  to  hand.  Each  metal  thus  having  its  special  use, 
the  idea  of  employing  both,  which  has  been  found  to  pre- 
vail in  almost  all  countries,  has  really  a  reasonable  origin. 

But  the  question  of  a  simultaneous  circulation  of  the 
two  currencies  being  decided  in  the  affirmative,  others 
presented  themselves  : — On  what  conditions  and  in  what 
form  should  this  process  be  carried  out  ?  Should  the  two 
metals  be  treated  alike,  and  invested  with  the  same  dig- 
nity ?  In  a  word,  should  each  of  them  be  the  standard, 
or,  what  comes  to  the  same  thing,  the  monetary  unit  ? 
The  preceding  statement  shows  that  this  duality  of  the 


NATURE   AND   CHARACTERISTICS   OF   MONEY.  41 

monetary  unit  would  be  opposed  to  the  very  nature  of 
things.  It  might  absolutely  be  possible  to  have  for  unity 
of  length  simultaneously  the  metre  and  the  foot,  because 
the  relation  of  one  to  the  other  is  fixed  and  invariable.  It 
would  be  very  different,  however,  with  two  weights,  one 
of  gold  and  the  other  of  silver,  which  should  have  been 
determined,  once  for  all,  as  the  measures  of  value.  The 
relation  of  one  metal  to  the  other  is  variable,  and  has 
never  ceased  to  vary,  more  or  less,  from  the  commence- 
ment of  the  world. 

Unfortunately,  however  impracticable  it  may  be  to  treat 
money  as  though  each  of  the  two  metals  constituted  equally 
the  monetary  unit,  that  is  no  reason  why  it  should  not 
have  been  resolved  upon  in  times  of  ignorance,  or  under 
governments  disposed  to  believe,  in  their  greediness,  that 
this  combination  would  be  more  favorable  to  the  frauds 
which  it  suited  them  to  perpetrate  on  the  currency. 

If  people  had  not,  wilfully  or  otherwise,  forgotten 
whence  money  is  derived,  and  if  submitting  to  the  nature 
of  things,  which,  in  such  matters,  cannot  be  thwarted  with 
impunity,  they  had  laid  down  the  principle  that  one  of  the 
two  metals  was  the  standard,  that  is  to  say,  the  substance 
constituting  the  monetary  unit,  the  other  would  then  have 
been  quite  obviously  a  subordinate  metal,  and  this  sub- 
ordination itself  would  have  permitted  it  to  have  been  de- 
voted in  various  forms,  to  uses  not 'necessarily  the  same  for 
gold  as  silver,  as  we  shall  have  occasion  to  show  in  the 
course  of  this  essay.  The  confusion,  real  or  simulated, 
which  has  so  long  and  so  often  prevailed  on  the  subject  of 
the  currency,  in  official  quarters,  is  the  reason  why  we  have 
departed  from  that  simplicity  which  would  have  averted 
much  embarrassment,  but  which  would  also  have, subjected 
governments  to  the  laws  of  honesty,  a  burden  which  they 
have  found  it  difficult  to  bear.  In  fact,  however,  govern- 
ments have  incessantly  undertaken  the  task  of  fixing  the 


42 


NATURE    AND    CHARACTERISTICS   OF   MONEY. 


relative  value  of  gold  and  silver,  according  to  the  effective 
value  of  the  two  metals  compared  one  with  the  other. 
Hence  have  sprung  many  changes  in  the  currency.  Un- 
fortunately, as  these  changes  have  been,  in  the  majority  of 
cases,  effected  without  regard  to  recognised  principles,  or 
rather  in  contempt  of  all  principle,  they  have  occasioned 
much  disorder  and  led  to  many  evils. 

The  plan  of  a  double  standard,  or  the  system  of  plac- 
ing gold  and  silver  absolutely  on  the  same  footing  in  the 
currency  of  a  State,  would  be  an  injustice  as  regards  all 
creditors,  who  would  always  be  paid  in  that  metal  which 
should  happen  to  be  at  the  lowest  value  at  the  moment 
when  the  payment  fell  due.  As  we  have  already  said,  the 
adverse  risk  to  the  creditor  is  from  the  fall  of  the  material 
from  which  money  is  made,  whilst  the  debtor  has,  on  the 
other  hand,  to  encounter  the  chance  of  a  rise.  Where 
there  is  but  one  standard,  and  provision  is  made  that  the 
legal  value  of  the  coins  of  the  other  metal  shall  be  in  con- 
formity with  the  quotations  of  its  value  in  the  metal  mar- 
ket (I  here  argue  upon  the  assumption,  which  is  true  in 
most  countries,  that  the  two  metals  are  used  for  money), 
the  debtor  and  creditor  have  equal  chances,*  and,  whatever 
happens,  neither  of  them  has  the  right  to  complain  of  be- 
ing the  victim  of  an  injustice.  But,  if,  instead  of  estab- 
lishing one  standard,  the  law  assigns  this  attribute  to  two 
metals,  or  if,  which  amounts  to  the  same  thing,  neither  of 
the  metals  is  invested  with  the  attribute,  the  equality  of 
chances  ceases  between  the  debtor  and  creditor.  The 
latter  has  in  effect  against  him  all  the  chances  of  a  fall 
which  one  or  the  other  metal  may  undergo.  If  it  be  the  na- 
tional creditor,  for  example,  he  will  lose,  in  the  first  place, 
by  the  fall  in  the  value  of  silver,  and  he  will  encounter  a 
second  loss  when  the  same  process  takes  place  in  gold.  In 

*  Excepting,  however,  the  inequality  before  alluded  to,  as  consequent 
on  the  progress  of  the  arts. 


NATURE  AND  CHARACTERISTICS  OF  MONEY.     43 

order  that  the  debtor  should,  on  the  contrary,  sustain  a  loss, 
it  would  be  necessary  that  the  two  metals  experienced  at 
the  same  moment  a  rise,  which  is  a  tolerably  improbable 
occurrence. 

However  striking  may  be  the  inequality  established 
between  the  situation  of  the  debtor  and  creditor,  by  the 
system  of  the  double  standard,  which  might,  I  repeat,  be 
more  properly  described  as  no  standard, — that  is  not  the 
sole  or  even  the  strongest  objection  to  which  it  is  exposed. 
If  the  two  metals  are  equal  before  the  law,  that  is  to  say, 
if  it  be  not  declared  that  one  is  the  standard,  and  the 
other  for  subservient  uses,  the  government,  having  the 
power,  will  yield  to  the  temptation,  of  manoeuvring  with 
the  one  and  the  other ;  for,  governments  being  proverbi- 
ally always  more  or  less  needy,  they  will  find  the  way  of 
relieving  themselves  of  a  portion  of  their  engagements, 
by  discharging  their  debts  with  whichever  of  the  two 
metals  shall  have  had  the  greatest  relative  fall  in  value. 
It  will  only  be  necessary,  for  example,  to  compare,  alter- 
nately, the  value  of  gold  with  that  of  silver,  and  the 
value  of  silver  with  that  of  gold,  to  diminish  successively 
the  burden  of  the  national  debt,  thereby  injuring  the  pub- 
lic creditor,  outraging  public  morals,  and  causing  great 
derangements  to  private  interests.  Thus,  when  gold  shall 
have  risen  in  value  in  comparison  with  silver,  the  State 
will  only  pay  in  the  latter  metal,  and  private  debtors  will 
not  fail  to  follow  the  example  :  the  law  will  have  author- 
ized them  to  do  so.  Fortune  changes  ;  rich  mines  of  gold 
are  discovered  ;  gold  instead  of  being  worth  fifteen-and-a- 
half  times  its  weight  in  silver,  is  worth  only  fourteen 
times,  afterwards  thirteen,  and  then  falls  to  twelve,  and 
even  to  ten.  Things  are  left  to  take  their  course,  and 
some  fine  day,  under  pretext  of  confirming  an  established 
state  of  things,  a  law  decides  that  the  relation  between 
the  two  metals,  instead  of  being  expressed  by  the  number 


44 


NATURE   AND    CHARACTERISTICS   OF  MONEY. 


15J,  shall  be  expressed  by  14  or  13.  Some  time  after- 
wards this  proportion  is  altered  to  that  of  10.  By  "virtue 
of  these  successive  combinations,  the  silver  coins,  the  value 
of  which  had  remained  stable,  are  melted  again  and  again, 
and  each  time  greatly  diminished.  The  debtor  henceforth 
acquits  himself  with  one  kilogramme  of  gold,  or  with  ten 
of  silver,  whereas  the  creditor  had  thought  he  was  to  re- 
ceive fifteen-and-a-half  of  the  latter  metal,  or  an  equiva- 
lent quantity  of  gold. 

A  little  later,  the  silver  mines  are  more  productive,  the 
production  of  that  metal  begins  to  increase,  and  its  value 
to  fall  ;  now  follows  another  deviation  :  from  the  relation 
of  1  to  10  there  is  a  rise  successively  to  that  of  1  to  12, 
13, 14,  15,  15J,  or  even  beyond  if  the  comparison  between 
the  market  value  of  the  two  metals  warrant  it.  Then  the 
State  and  other  debtors  discharge  their  debts  only  in  sil- 
ver ;  or,  if  they  pay  in  gold,  it  is  a  quantity  diminished, 
compared  with  what  they  would  have  paid  during  the  pre- 
ceding period,  in  proportion  to  the  fall  in  silver.  Another 
oscillation  reduces  the  value  of  gold  ;  this  depreciated 
metal  then  becomes  the  preferable  type,  and  it  is  made 
the  standard  of  comparison  for  silver,  the  coins  of  which 
lose  another  portion  of  their  weight.  These  double-deal- 
ings are  perpetrated  by  virtue  of  a  law,  against  which, 
whatever  may  be  thought  by  those  who  regard  it  from  an 
impartial  and  equitable  point  of  view,  there  is  really 
nothing  to  be  said  from  the  moment  that  we  recognise  the 
fallacious  principle  of  a  double  standard.  At  each  change 
the  creditor  is  deprived  of  something,  until  with  sufficient 
time  it  ends  in  his  losing  nearly  everything. 

Supposing  this  scene  to  be  enacted  in  a  country  where 
the  franc  is  in  use,  this  coin,  which  originally  contained 
five  grammes  of  silver  of  nine-tenths  fineness,  is  succes- 
sively reduced  till  it  contains  but  four,  then  three,  and 
always  less  and  less.  This  alternate  adjustment,  by  vir- 


NATURE  AND  CHARACTERISTICS  OF  MONEY.     45 

tue  of  which,  under  the  false  theory  of  a  double  standard, 
the  depreciated  nietal  is  always  practically  the  type,  would 
be  a  new  mode  of  arriving  at  precisely  the  same  result  as 
was  sought  and  obtained  by  the  ancient  princes  when, 
stealthily  or  boldly,  they  mixed  copper  with  their  silver, 
or  altered,  by  proclamation,  the  pound  in  their  established 
coinage.  In  this  manner,  with  the  principle  of  a  double 
standard,  the  franc  might  be  reduced  to  the  seventy- 
second  part  of  &  franc,  just  as  the  royal  clippers  and  coin- 
ers of  olden  times  degraded  the  pound  to  the  seventy- 
second  part  of  a  pound  by  the  continual  admixture  of  the 
baser  metals. 

We  will  explain  more  clearly  this  result  by  a  hypo- 
thetical case.  The  franc  being  5  grammes  of  silver  of 
the  standard  of  nine-tenths  fineness,  the  equivalent  in 
gold  consists  actually  of  32 J-  centigrammes  of  the  same 
fineness.  If  in  consequence  of  gold  falling  to  ten  times 
its  weight  in  silver,  it  be  decided  that  the  franc  shall  still 
remain  equal  to  this  quantity  of  gold,  then  the  silver 
must  be  recoined  so  that  the  franc  shall  comprise  only  3J 
grammes,  of  the  same  fineness  of  nine-tenths.  Suppose 
that  silver  in  its  turn  falls  ;  if  the  fall  be  such  that  the 
relative  value  rises  to  15J,  and  if  in  the  system  of  the 
double  standard,  3J  grammes  of  silver  for  the  franc  is  to  be 
preserved,  then  the  gold  ought  to  be  recoined,  so  that 
there  shall  not  be  more  in  one  franc  than  21  centi- 
grammes. A  fresh  fall  in  gold  following,  if  it  be  such 
that  to  restore  the  relation  of  1  to  10  between  the  two 
metals,  a  similar  operation  is  necessary,  the  franc  will 
then  only  contain  2  grammes  and  one-tenth  of  silver. 
Thus  it  will  be  seen  by  how  rapid  a  process  the  currency 
of  a  country  may  be  swallowed  up. 

Nothing  more  need  be  said  to  induce  us  in  our  day  to 
resist  all  the  efforts  which,  under  various  pretexts  and 
forms,  are  made  to  restore  the  double  standard  to  favour, 
or  to  revive  it  in  practice. 


46  NATURE    AND    CHARACTERISTICS   OF  MONEY. 

For  the  very  reason  that  the  plan  of  a  double  standard 
leads,  by  the  deduction  of  an  irresistible  logic,  to  conse- 
quences so  manifestly  contrary  to  an  equitable  security  of 
contracts,  it  is  right  in  studying  the  monetary  system  of  a 
country  to  require  the  clearest  and  best  proofs  before  decid- 
ing that  it  is  avowedly  founded  on  the  principle  of  a 
double  standard.  For  it  is  in  fact  to  declare  that  the 
legislators  of  such  a  country  are,  in  monetary  affairs,  guilty 
of  ignorance  or  of  injustice  and  bad  faith,  and  such  an 
imputation  ought  not  to  be  made  excepting  on  sufficient 
grounds. 


CHAPTER  V 

OF  THE  MEANING  OF  CERTAIN  WORDS  SPECIALLY  APPLICABLE  TO 
MONEY  AND  THE  PRECIOUS  METALS :— PRICE,  VALUE,  PREMIUM, 
DEARNESS,  CHEAPNESS. 

BEFORE  bringing  these  preliminary  generalities  to  a  close, 
and  entering  upon  the  core  of  the  subject,  I  beg  to  be 
allowed  to  define  the  true  meaning  of  some  expressions 
which  are  frequently  used  in  our  day  in  discussing  the 
question  of  the  currency.  On  this  point  we  find  persons 
who  are  not  without  influence  on  public  opinion,  deluding 
themselves  with  phrases  of  dubious  meaning,  and  it  is 
against  this  danger  that  I  would  wish  to  warn  the  reader, 
and  those  persons  themselves. 

The  expressions  which  I  have  here  more  particularly 
in  view  are  those  of  value  and  price,  applied  not  as  has 
already  been  done  to  commodities  in  general,*  but  es- 
pecially to  the  currency,  and  the  precious  metals  of  which 
it  is  made.  I  allude  also  to  the  expressions,  premium, 
clearness,  and  cheapness,  taken  in  relation  to  the  same 
objects, — the  currency  and  the  precious  metals. 

*  See  Section  II.,  Chapter  I. 


NATURE    AND    CHARACTERISTICS  OF  MONEY.  47 

In  ordinary  language,  the  words  value  and  price  are 
often  used  as  synonymes.  They  are  different,  however,  in 
their  meaning,  as  has  been  already  shown  in  reference  to 
commodities  in  general.  It  is  well  here  to  define  this  differ- 
ence in  regard  to  the  currency,  and  the  precious  metals  of 
which  it  is  made.  It  is  such  that  one  could  indicate  in- 
stances where,  if  the  value  of  one  of  the  precious  metals 
fell,  its  price  would  rise.  This  is  not  a  scholastic  subtle- 
ty, imagined  for  the  amusement  of  trifle rs  ;  it  is  a  fact 
presented  to  us  in  even  vast  proportions,  in  history. 
Thus,  from  the  time  of  the  discovery  of  America  to  our 
day,  the  value  of  gold  in  ingots  or  in  coins  has  certainly 
diminished,  since  at  the  present  time  a  given  quantity  of 
gold  in  coins  or  ingots  is  exchanged  for  a  smaller  quantity 
of  corn,  or  of  other  ordinary  products,  or  for  fewer  days' 
labour.  However,  the  price  of  gold,  in  silver  money,  has 
increased  ;  and  in  thus  expressing  myself,  I  do  not  allude 
to  the  circumstance  of  the  coins  having  been  altered,  to 
such  an  extent  that  the  weight  of  metal  which  was  de- 
nominated a  silver  pound,  under  Saint  Louis,  would  have 
made  twenty  pounds  under  Louis  XVI.  A  rise  in  price 
of  this  kind  is  only  nominal.  That  which  is  meant,  and 
which  is  incontestable,  is  that,  supposing  that  the  currency 
in  France  had  never  been  altered,  and  that  its  coins  had 
continued  of  the  same  weight  and  fineness  as  in  1492,  the 
year  of  the  first  voyage  of  the  great  Genoese  navigator, 
the  gold  coin  which  would  then  have  exchanged  for  ten 
or  eleven  silver  coins  of  the  same  weight  would  in  the 
nineteenth  century  have  regularly  exchanged  for  fifteen  or 
sixteen.  In  a  word,  the  price  of  gold  has  positively  and 
effectively  risen,  from  1492  to  our  day,  in  the  ratio  of  10£ 
to  15r,,  whilst  its  value  has  declined. 

The  price  of  a  thing,  as  has  already  been  said,  is  its 
value  in  relation  to  money.  When  the  precious  metals 
are  in  question,  it  is  convenient  to  distinguish  between  in- 


48  NATUKE   AND    CHARACTEKISTICS   OF  MONEY. 

gots  and  coined  money,  and  also  to  particularise  the  species 
of  money  in  which  the  price  is  measured.  If,  for  example, 
I  speak  of  gold,  I  am  bound  for  clearness  not  only  to  in- 
dicate whether  I  refer  to  the  ingot  or  the  twenty-franc 
piece,  but  also  whether  I  reckon  the  price  in  silver  or  gold 
coins.  Assuming  the  coinage  to  be  accurately  struck,  a 
fair  assumption  in  these  days  when  the  operations  of  the 
Mint  are  brought  to  such  perfection,  and  that  every  piece 
of .  gold  is  of  full  and  equal  value,  then  the  price  in  gold 
currency,  of  a  thousand  francs  in  gold  coin,  or  say  fifty 
pieces  of  twenty  francs,  can  only  be  a  thousand  francs. 
But  the  price  of  an  ingot,  containing  weight  for  weight, 
and  fineness  for  fineness,  the  same  quantity  of  gold  as  the 
fifty  pieces,  may  according  to  circumstances  exceed  them 
in  value.  It  would  be  worth  more  if,  under  circumstances 
of  real  or  supposed  exigency,  there  were  a  great  demand 
for  ingots  for  coining  at  the  same  time  that  there  were 
very  few  on  offer  in  the  market.  It  is  a  case  which  occurs 
but  seldom,  but  which  has  happened  in  our  day.  Thus, 
between  the  1st  July,  1855,  and  the  1st  January,  1858, 
the  Bank  of  France  purchased  at  a  premium  gold  to  the 
amount  of  1,363  million  francs  (£54,520,000),  the  pre- 
mium on  which  in  some  instances  amounted  to  15  per 
1,000.  The  sum  total  paid  by  the  Bank  for  premiums, 
in  this  interval  of  two  years  and  a  half,  exceeded  fourteen 
million  francs  (£560,000).* 

On  the  contrary,  the  ingot  will  be  worth  more  than 

*  On  this  subject  some  persons  are  of  opinion  that  the  Bank  submitted 
to  terms  which  might  have  been  avoided.  Without  noticing  in  detail  all 
that  has  been  urged  in  this  sense,  I  may  call  to  mind  the  information  af- 
forded by  Lord  Liverpool  (p.  150,  edition  of  1805,  of  his  treatise  on  the 
English  currency),  that  when  the  Bank  of  England  in  1797  struggled  With 
all  its  might  to  avoid  a  suspension  of  specie  payments,  she  purchased  no 
gold  above  the  money  standard,  that  is  to  say  at  more  than  £3.  17s.  10-Jd. 
an  ounce,  of  metal  of  the  legal  fineness.  For  the  twenty  years  that  pre- 
ceded the  suspension  of  specie  payments,  the  average  of  the  price  paid  by 
her  for  gold  was  2|d.  an  ounce  under  the  standard  or  Mint  price. 


NATURE    AND    CHARACTERISTICS  OF  MONEY.  49 

coins  of  the  same  metal,  always  assuming  them  to  be  of 
full  weight  and  fineness,  when  bullion  flows  to  the  Mint 
to  be  coined.  Its  destination  being  the  coinage,  it  is  natu- 
ral that  it  should  be  at  a  disadvantage  in  comparison  with 
coined  money  to  the  extent  of  the  expense  of  the  operation, 
including  the  loss  of  interest  during  the  time  that  the  bul- 
lion is  retained  at  the  Mint.  The  case  now  indicated,  in 
which  the  ingot  sells  for  less  than  an  equal  weight  of  coined 
metal,  is  that  which  usually  presents  itself  to  our  view 
in  European  countries. 

Another  case,  in  which  the  ingot  may  be  worth  more 
than  coins,  is  that  of  a  country,  for  example,  where  a  gold 
currency  abounds,  and  from  which  this  metal  may  be  ex- 
ported to  other  countries  in  which  the  coins  of  the  export- 
ing State  are  not  current.  It  might  be  r#ore  advantageous 
in  such  a  case  to  export  ingots  than  coins,  or,  to  express 
the  same  thing  in  other  words,  it  might  be  necessary  to 
convert  the  coins  into  ingots  before  forwarding  them  to 
their  destination  ;  then  the  ingot  would  necessarily  be 
worth  more  than  the  coins,  weight  for  weight,  and  fineness 
for  fineness. 

A  directly  opposite  case  to  the  preceding  is  that  where 
the  money  of  the  exporting  country  enjoys,  through  preju- 
dice or  otherwise,  great  favour  in  other  regions.  Com- 
merce then  finds  it  advantageous  to  withdraw  coined 
money  rather  than  ingots  from  this  country,  to  transport  it 
to  those  regions.  Hence  a  sufficient  reason  why  the  money 
should  be  at  a  greater  or  less  premium  over  the  raw  metal. 
It  is  thus  that  Spanish  dollars,  especially  those  called  pil- 
lars, were,  and  still  are,  in  great  request  in  China,  and 
pass  in  some  localities  at  a  value  quite  disproportioned  to 
the  quantity  of  metal  they  contain.  There  needs  no  other 
motive  why  they  should  be  sought  for,  not  only  in  the 
country  of  their  production,  but  all  over  the  world,  and 
paid  for  in  ingots  at  a  premium. 
4 


50  NATURE    AND    CHARACTERISTICS  OF   MONEY. 

It  would  be  a  very  different  hypothesis  from  the  fore- 
going, to  suppose  that  the  coins  have  become  worn  by  the 
process  of  circulation,  so  as  to  have  lost  an  appreciable 
part  of  their  weight,  as  always  occurs  after  the  currency 
has  remained  a  long  time  without  being  renewed.  It  is 
quite  clear  that,  in  such  a  case;  an  ingot  of  gold,  contain- 
ing weight  for  weight,  and  fineness  for  fineness,  the  quan- 
tity of  metal  contained  in  fifty  perfect  twenty-franc  pieces, 
would  be  worth  more  than  fifty  of  the  same  pieces  when 
rendered  light  from  excessive  usage.  Consequently,  the 
price  of  an  ingot  in  the  current  coins  would  be  at  a  great 
premium.  But  then  the  fifty  twenty-franc  pieces,  with- 
drawn from  the  circulation,  would  not  really  and  sub- 
stantially be  pieces  of  twenty-francs.  They  would  be 
simply  pieces  of  "nineteen  francs,  or  eighteen  francs,  to 
which,  by  an  abuse  of  language,  or  by  the  neglect  of  the 
authorities  to  resort  to  a  recoinage,  they  had  preserved  the 
name  and  the  currency  of  twenty-franc  pieces. 

It  is  needless  to  add  that  what  has  been  said  of  coins 
and  ingots  of  gold,  applies  equally  to  silver  coins  in  rela- 
tion to  ingots  of  silver,  and  vice  versa. 

Examples  of  differences  of  this  kind  between  the  price 
of  ingots  and  that  of  coins  of  the  same  metal  abound  in 
history.  To  observe  the  phenomenon. in  all  its  simplicity, 
and,  if  I  may  so  speak,  in  all  its  purity,  it  is  better  to 
consult  the  history  of  England  than  that  of  other  states, 
because  out  of  England,  the  facts  relating  to  the  currency 
have  been  almost  everywhere  complicated  with  the  inci- 
dents of  a  falsification  of  the  standard.  In  England,  then, 
the  reduction  in  the  intrinsic  value  of  the  currency  by  the 
passage  from  hand  to  hand,  a  loss  to  which  the  sweaters 
of  coins  have  not  failed  to  contribute  their  proportion  when 
once  they  have  ceased  to  possess  their  full  legal  weight, 
has  sometimes,  been  so  great  that  the  ingot  corresponding 
legally  with  a  certain  number  of  coins,  contained  a  quarter, 


NATURE    AND    CHARACTERISTICS   OF  MONEY.  51 

a  third,  or  even  a  half  more  of  metal  than  these  did,  taken 
from  the  average  of  the  current  circulation.  It  followed 
that  the  ingot  bore  an  enormous  premium,  a  premium 
moreover  which  was  quite  apparent.  This  is  what  befel. 
the  silver  currency  in  the  reign  of  William  III.,  before  the 
recoinage  of  1695.  The  ingot  of  silver  was  at  a  great  pre- 
mium in  the  current  coins  of  the  same  metal ;  indeed,  the 
English  gold  coin  so  well  known  under  the  name  of  the 
guinea,  and  which  was  at  that  time  of  good  weight,  passed 
for  much  more  than  its  value  in  shillings.  From  the  mo- 
ment that  the  silver  money  had  been  recoined,  and  was 
thus  perfect,  the  premium  which  the  ingot  had  gained 
disappeared  ;  that  of  the  guineas,  in  relation  to  the  silver 
money,  fell  to  the  insignificant  amount  which  corresponded 
to  the  slight  difference  in  the  market  quotations  for  these 
two  metals,  and  the  current  value  conferred  by  law  or 
usage  upon  these  gold  coins  as  compared  with  good  silver 
money.  * 

It  is  not  an  uncommon  thing  in  France  to  hear  it 
affirmed  that  gold  has  lost  none  of  its  value  since  the  dis- 
covery of  the  Australian  and  Californian  mines,  and  as  a 
proof  the  fact  is  cited  that,  in  the  market  of  Paris,  ingots 
of  gold  are  at  par,  or  at  least  that  they  are  only  at  a  small 
premium.  Persons  who  reason  thus  fall  into  a  confusion, 
which,  however,  it  becomes  necessary  to  treat  with  some 
care,  for  men  of  very  distinguished  talent  have  fallen  into 
it  ;  I  will  soon  quote  an  example.  To  know  with  cer- 
tainty whether  gold  is  dearer  or  cheaper,  whether  it  be  at 
a  premium  or  not,  the  method  is  not  to  compare  ingots  of 
this  metal  with  gold  coins.  Between  the  ingot  and  coins 
of  full  weight  and  fineness  there  can  only  be  by  accident 
a  sensible  difference.  It  is  limited,  in  fact,  by  the  charge 

*  See  Lord  Liverpool's  treatise,  p.  69.  There  is  also  a  very  interesting 
expose  of  the  monetary  situation  of  Great  Britain  at  this  time,  in  the  bril- 
liant History  of  England,  by  Lord  Macaulay,  Chap.  XXL 


52  NATURE   AND    CHARACTERISTICS  OF  MONET. 

at  the  Mint,  including  the  interest  of  capital  during  the 
interval  of  time  absorbed  in  the  process  of  coining.  A 
better,  and  the  only  good  measure  of  the  rise  or  fall  oc- 
curring in  the  value  of  gold  is  that  which  takes  place  in 
its  price  in  silver  money,  or,  which  amounts  to-  the  same 
thing,  in  the  price  of  silver  ingots  in  gold  coins  ;  and  then 
it  must  be  premised  that  no  disturbance  shall  have  arisen 
to  cause  a  sudden  change  in  the  value  of  silver. 

Thus,  at  the  present  time,  the  very  decided  premium 
which  silver  is  acquiring,  represents  exactly  the  divergence 
that  has  occurred  between  gold  and  silver,  for  this  premium 
indicates  the  excess  of  the  price  of  silver  as  compared  with 
the  legal  par  in  gold  coins.  Now,  for  how  much  does  the 
fall  in  gold  enter  into  this  divergence  ?  and  for  how  much 
the  rise  in  silver,  if  any  rise  have  really  taken  place  ? 
This  is  not  the  question  at  present  under  discussion,  and 
if  it  were,  I  doubt  the  possibility  of  solving  it  with  any 
precision  in  figures.  I  have  merely  wished  to  point  out 
the  error  into  which  some  persons  fall  who  try  to  estimate 
the  exact  rise  or  fall  of  gold  by  comparing  the  market 
price  of  ingots  of  this  metal  with  the  coins  into  which  they 
are  or  may  be  converted. 

This  error,  however,  occurs,  without  any  qualifying 
circumstances,  in  Lord  Liverpool's  treatise. *  After  dem- 
onstrating that  silver  has  a  less  stable  value  than  gold, 
that  statesman,  gifted  nevertheless  with  a  rare  intelli- 
gence, estimates  the  variations  which  gold  and  silver  com- 
modities had  undergone,  by  a  reference  to  their  price  in 
current  money,  at  a  time  when  the  currency  consisted  ex- 
clusively of  gold  or  of  bank  notes  convertible  on  demand 
into  gold.  One  could  hardly  succeed  in  finding  a  device 
better  calculated  to  persuade  the  mystified  reader  that 
silver  alone  undergoes  any  variations,  and  that  gold  by 
some  inexplicable  privilege  escapes  all  appreciable  altcra- 

*  Page  149  ;  edition,  1805. 


NATURE   AND   CHARACTERISTICS  OF   MONEY.  53 

tions.  Such  a  mistake,  on  the  part  of  an  authority  of  so 
high  an  order,  whose  good  faith,  moreover,  is  above  all 
suspicion,  shows  how  much  attention  must  be  brought  to 
the  study  of  the  currency,  and  to  the  qualification  of  mon- 
etary facts,  if  we  would  avoid  vulgar  errors,  and  not  be- 
come the  dupes  of  false  appearances. 


SECTION  III. 


OF   THE   PRESENT  PRODUCTION    OF    GOLD    AND 
ITS  OUTLET. 


CHAPTER  I. 

OF  THE  INCKEASE  IN  THE  PEESENT  PEODUCTION  OF  GOLD  AS 
COMPAEED  WITH  THE  PAST.-THE  EXTENDED  COINAGE  OF  GOLD 
WHICH  HA^  FOLLOWED. 

AT  the  commencement  of  the  century,  the  quantity  of 
gold  yielded  by  the  various  countries,  whose  production 
flows  to  the  general  market  of  the  civilised  Western*  or 
Christian  States,  was  about  24,000  kilogrammes^  of  pure 
metal  (about  £3,312,000). 

But  to  arrive  at  this  quantity  it  is  necessary  to  in- 
clude the  production  of  several  countries  which  then  had 
but  little  commercial  intercourse  with  the  principal  na- 
tions of  Christendom,  as,  for  instance,  the  Island  of  Bor- 
neo, and  several  other  localities  in  the  Indian  Archipelago. 

*  The  word  Western  is  here  used  in  contradistinction  to  the  extreme 
East,  which  consists  of  remote  Asia,  and  especially  of  India  and  the  Empires 
of  China  and  Japan. 

f  I  prefer  using  kilogrammes  of  fine  gold  rather  ih&n  francs  in  the  state- 
ment of  accounts.  Fewer  figures  will  be  required,  and  they  will  be  more 
easily  compared  with  one  another.  The  kilogramme  of  gold,  by  the  terms 
of  the  law  7  Germinal,  year  11,  is  equal  to  3,444  francs  44  cents  (£138). 


THE  PRESENT  PRODUCTION  OF  GOLD.        55 

Confining  himself  to  the  production  of  the  American 
continent,  of  Europe,  and  of  Asiatic  Kussia,  M.  von 
Humboldt  calculates  that  it  then  amounted  to  15,800 
kilogrammes*  (£2,180,400.)  It  is  doubtful  if  the  gold 
which  the  civilised  Christian  nations  drew  from  other 
sources,  and  especially  from  Africa,  added  to  this  supply 
a  weight  of  2,0'00  kilogrammes  (£276,000).  We  might 
thus  estimate  at  18,000  kilogrammes  (£2,484,000)  the 
amount  of  gold  which,  at  the  beginning  of  this  century, 
arrived  every  year,  to  augment  the  metallic  wealth  of  the 
nations  of  Christendom.  It  underwent  very  little  increase 
until  the  working  of  the  gold  mines  of  the  Oural,  and 
afterwards  of  those  of  Siberia,  contributed,  with  the  aid 
of  other  secondary  sources,  to  swTell  somewhat  suddenly 
the  supply  to  threefold  the  above. amount.  Thus  matters 
stood  at  the  commencement  of  1848,  when  took  place 
the  discovery  of  the  rich  deposits  of  California,  destined  to 
be  so  soon  followed  by  a  similar  event  in  Australia.  At  this 
moment  we  may  estimate,  in  round  numbers,  the  mass  of 
gold  furnished  to  the  Christian  States  at  275,000  kilo- 
grammes (£37,950,000),  if  not  more.  The  increase,  then, 
is  at  the  rate  of  1  to  15  in  the  course  of  forty  years,  and 
nearly  in  the  proportion  of  1  to  5  since  1848.  In  silver, 
on  the  contrary,  there  has  been  but  little  change.  The 
production,  at  the  beginning  of  the  century,  was  900,000 
kilogrammes  (£7,965,000;  at  present  it  is  estimated 
slightly  to  exceed  a  million  kilogrammes  (£8,850,000). 

The  real  revolution  which  has  taken  place  in  the  sup- 
ply of  gold  may  be  expressed  in  another  way.  The  region 
which,  until  the  discovery  of  the  mines  of  Siberia,  was 
the  chief  seat  of  production  for  the  European  nations,  I 
mean  the  whole  continent  of  America,  has,  since  the  firs£ 
voyage  of  Columbus  down  to  the  discovery  of  the  mines 
of  California,  that  is  to  say,  during  the  356  years  which 

*  Essay  on  New  Spain,  "Vol.  3,  p.  456 ;  edition  of  1827. 


56        THE  PRESENT  PRODUCTION  OF  GOLD. 

intervened  between  1492  and  1848,  and  inclusive  of  the 
gold  extracted  from  silver  ore  as  well  as  that  from 
the  gold  mines,  only  produced  2,910,000  kilogrammes 
(£401,580,000)  of  pure  metal.  At  this  time  the  yield 
being  nearly  300,000  kilogrammes  (£41,400,000),  the 
civilised  world  receives  of  this  metal,  in  a  single  year, 
about  the  tenth  part  of  the  total  which  had  been  fur- 
nished by  America  from  the  first  departure  of  Columbus 
down  to  1848. 

We  might  present  under  another  form,  perhaps  still 
more  striking,  the  productive  power  of  the  new  auriferous 
deposits  of  California  and  Australia,  by  indicating  the 
quantity  of  metal  which  a  miner  extracts  in  an  average 
day's  work.  With  regard  to  California,  we  have  the  Ke- 
port  of  Dr.  Trask,  from  which  an  extract  has  been  given 
by  M.  Delesse,  Inspector  of  Mines,  in  the  Annales  des 
Mines,  third  report  of  1856  (5th  series,  vol.  9th,  p.  649).* 
It  is  there  *  seen  that  in  1854,  by  the  labour  of  eight 
months,  each  miner  produced  a  quantity  of  gold  valued 
at  700  dollars  (£140),  or  about  1,100  grammes  of  gold. 
At  twenty-five  days7  work  a  month,  which  is  certainly  an 
over-estimate,  it  is  an  average  daily  extraction  of  5J 
grammes  of  gold,  which,  at  the  standard  of  French  money 
is  19  francs  (15s.  lOd.)  An  intelligent  officer  of  the  French 
navy,  who,  on  his  return  from  the  second  campaign  of  the 
Kamtschatka,  travelled  in  the  interior  of  California  in 
1855,  and  applied  himself  to  the  collection  of  some  exact 
information,  M.  Armand  Coste,  gives  the  sum  of  15  francs 
as  the  minimum  of  what  a  man  can,  on  the  average,  gain 
at  the  mines,  an  estimate  at  least  equal  to  that  which  I 
have  just  quoted- from  Dr.  Trask. 

In  Australia,  the  situation  of  the  miner  is  not  less 
favourable.  Thus  in  1854,  in  the  district  of  Ballarat,  one 
of  the  most  productive  in  the  colony  of  Victoria,  which  is 

*  See  page  80  of  the  Report  of  M.  Trask. 


THE  PRESENT  PRODUCTION  OF  GOLD.        57 

itself  the  richest  in  gold,  the  ordinary  wages  of  a  miner, 
according  to  the  Parliamentary  Return  of  1856,*  was  30 
shillings  a  day.  The  sum  of  15  shillings  is  indicated  as 
the  minimum  in  the  same  document ;  and  these  remunera- 
tions apply  to  the  wages  of  a  miner,  which  implies  that 
the  average  produce  of  a  day's  work  in  gold  is  superior  to 
the  quantity  of  metal  contained  in  15  and  30  shillings, 
for,  of  course,  the  capitalist  who  pays  the  labourer  must 
have  his  profit.  Hence  we  shall  not  exaggerate  if  we 
adopt  for  Australia  as  for  California  the  sum  of  19  francs 
(15s.  lOd.)  as  the  ordinary  earnings  of  the  miner.  Nine- 
teen francs  !  In  passing,  let  us  remark,  what  a  contrast 
with  the  gold-washer  of  the  Rhine,  whose  day's  work 
yields  him  gold  dust  of  the  value  of  1  franc  50c.  or  2 
francs^  (15d.  or  20d.),  and  who  still  follows  the  occupa- 
tion !  If  then  the  auriferous  regions  preserved  indefinitely 
the  same  richness,  the  value  of  gold  might  fall  until  the 
sum  of  19  of  our  present  francs  in  gold  (15s.  lOd.)  was 
only  equal  to  the  ordinary  price  of  a  day's  labour  in  Cali- 
fornia and  Australia,  after  the  cost  of  subsistence  and  the 
rate  of  wages  should  have  there  found  their  permanent 
level.  Now,  we  are  justified  in  concluding  that  in  Cali- 
fornia and  Australia,  the  day's  labour  must  gradually  be 
assimilated  to  the  rate  which  prevails  in  temperate  cli- 
mates, among  the  most  prosperous  nations  of  Christendom, 
and  which  in  our  day  is  about  five  francs  (4s.  2d.)J  It 

*  Report  of  the  Commission  appointed  by  the  governor  of  the  province 
of  Victoria  to  report  on  the  state  of  the  mines.  This  report  is  comprised 
in  the  Blue  Book,  entitled — Further  Papers  relative  to  the  Discovery  of  Gold 
in  Australia.  February,  1§56. 

f  According  to  a  curious  memoir  by  the  engineer  of  mines,  Daubree, 
which  goes  back  for  a  few  years,  the  washing  of  the  auriferous  sands  of  the 
Rhine  is  a  branch  of  industry  which  still  subsists,  although  for  a  long  time 
it  has  only  been  carried  on  upon  a  small  scale.  The  production  amounts 
yearly  to  from  12  to  15  kilogrammes  (£1,600  to  £2,000). 

\  The  hypothesis  here  indicated,  according  to  which  the  price  of  a  day's 
work,  in  Australia  and  California,  should  finally  fall  to  a  sum  representing 
in  food  and  other  enjoyments  that  which  is  procurable  among  civilised 


58  THE    PRESENT   PRODUCTION    OF    GOLD. 

follows  that  the  value  of  gold  might  fall  till  the  weight  of 
5i  grammes  of  pure  metal,  representing  at  present  19 
francs  (15s.  10cL),  might  correspond  only  to  the  amount 
of  well-being  which  can  in  our  day  be  procured  for  the 
quantity  of  metal  comprised  in  five  francs.  By  this  cal- 
culation the  fall  would  in  the  end  amount  to  three-fourths, 
— in  other  words,  to  procure  the  same  amount  of '  subsist- 
ence as  at  present,  it  would  be  requisite,  all  other  things 
being  equal,  to  give  a  quantity  of  gold  greater  in  the  pro- 
portion of  about  four  to  one.  According  to  this  we  are 
still  vqry  far  from  the  end  of  the  crisis. 

I  am  far  from  saying  that  the  fall  will  not,  long  before 
it  reaches  that  point,  encounter  obstacles  which  will  arrest 
it.  Assuredly  it  may  so  happen  in  the  very  nature  of 
things,  and  for  example,  in  the  conditions  of  production. 
It  is  a  subject  on  which  I  will  shortly  offer  some  further 
facts.  But,  at  least,  it  seems  to  me  quite  incontestable 
that  there  remains  a  great  margin  of  depreciation. 

As  regards  the  force,  nay  the  violence,  with  which  the 
new  gold  is  diffusing  itself  through  the  monetary  system 
of  the  civilized  world,  and  particularly  that  of  France, 
here  are  some  facts  which  speak  in  a  significant  manner: — 

During  the  government  of  Napoleon  I.,  the  coinage  6f 
gold  amounted  to  527  million  francs  (£21,080,000),  or 
an  average  of  48  millions  per  annum  (£1,812,000).*  Un- 
people in  temperate  regions  for  the  sum  of  five  francs  in  our  day,  seems 
reasonable.  California  and  Australia  are  healthy  countries,  where  the 
European  race  can  labour,  and  where  food  ought  to  be,  if  it  is  not  already, 
at  a  moderate  price,  either  from  the  abundant  production  of  the  soil,  or 
from  the  facilities  for  importation  by  sea.  Doubtless,  if  the  number  of 
hands  remained  as  insufficient  as  at  present,  the  wages  of  manual  labour 
would  remain  very  high ;  but  we  know  with  what  facility  emigrants  can  be 
transported  to  the  most  remote  regions,  and  new  and  more  economical 
means  of  conveyance  are  now  being  organised  between  Europe  and  Aus- 
tralia, as  well  as  between  the  eastern  shores  of  America  and  California. 

*  The  coining  of  gold  was  only  continued  for  eleven  years  of  this  reign. 
It  did  not  commence  till  after  the  promulgation  of  the  law  of  7  Germinal, 
year  11. 


THE    PKESENT   PRODUCTION    OF    GOLD.  59 

der  Louis  XVIII.,  it  was  a  smaller  proportion,  amounting 
to  a  total  of  389  million  francs  (£15,560,000),  or  an 
average  of  39  millions  per  annum  (£1,560,000).  Under 
Charles  X.,  a  great  decline  is  observable  ;  for  the  whole 
reign  the  gold  coinage  amounted  to  only  52  mill  ion  francs 
(£2,080,000).  During  the  seventeen  years  of  Louis 
Philippe's  reign,  gold  was  only  coined  to  the  amount  of 
215  million  francs  (£8,600,000),  or  12-*-  millions  annual- 
ly (£500,000).  The  ascending  reaction  began  to  manifest 
itself  in  1848,  for,  in  the  general  distress  caused  by  the 
revolution  of  that  year,  many  persons  carried  their  gold 
plate  to  the  Mint  to  be  converted  into  money ;  but  the 
influence  of  the  new  mines  is  not  perceptible  till  after  1850. 
During  the  period  of  eight  years,  ending  the  31st  Decem- 
ber 1857,  the  gold  coined  at  the  Paris  Mint  amounted  to 
2  milliards  750  million  francs  (£110,000,000),  or  an 
average  of  343  millions  (£13,720,000)  yearly.*  During 
the  period  of  forty-five  years,  comprised  between  the  7th 
Germinal,  year  11,  and  the  1st  January,  1848,  it  had  only 
been  1  milliard  186  millions  (£47,440,000),  or  22,300,000 
francs  (£892,000)  per  annum.  The  greatest  amount 
coined  in  one  year  was  in  1857,  when  it  reached  572,561,- 
225/rawcs  (£22,902,449);  and  then  we  have  for  1856  the 
sum  of  508,281,995  francs  (£20,331,279).  In  no  other 
country  does  the  coinage  of  gold  attain  these  proportions, 

*  It  may  not  be  useless  to  know  from  year  to  year  the  progress  of  the 
coinage  of  gold  in  France  during  this  period.     It  is  as  follows  : — 

FRANCS.  •  POUNDS   STERLING. 

1850     85,192,390 3,407,695 

1851     ..  269,709,570     '10,788,382 

1852     27,028,270     1,081,130 

1853  312,964,020  12,518,560 

1854  526,528,200  21,061,128 

1855  447,427,820  17,897,112 

1856  508,281,995  20,331,279 

1857  572,561,225 22,902,449 


Total  francs...  2,749,693,490  109,987,735 

1858,  during  the  first  six  months,  £9,483,250. 


60  THE    PRESENT    PRODUCTION    OF    GOLD. 

or  anything  like  them.  In  England,  where,  properly- 
speaking,  gold  alone  constitutes  the  currency,  the  period 
of  the  last  seven  years,  for  which  we  have  returns  from 
January  1st,  1850,  to  the  31st  December,  1856,  presents 
only  a  total  of  £45,749,868  sterling,  or  an  annual  average 
of  £6,535,605  sterling.  This  is  a  considerable  increase 
upon  the  British  coinage  in  the  previous  years;  for,  during 
the  septennial  period  immediately  preceding,  the  total  of 
gold  coined  amounted  to  only  £28,539,711  sterling,  or  a 
yearly  average  of  £4,077,101;  but  the  increase  is  far  less 
than  in  France. 


CHAPTER   II. 

DIMINISHED  COINAGE   OF  SILVER  IN  FEANCE— GOLD  IS   ALEEADY  AT 
A  DISCOUNT  IN  COMPARISON  WITH  SILVER. 

WHILST  in  France  the  coinage  of  gold  takes  this  unex- 
ampled development,  the  like  process  with  regard  to  sil- 
ver is  diminishing,  and  bids  fair  to  cease  altogether.  In 
the  period  of  forty-eight  years,  from  the  18th  Brumaire, 
year  8,  to  1848,  there  had  been  coined  3,891,000,000 
francs  in  silver  (£155,640,000),  or  a  yearly  average  of 
81,065,000  francs  (£3,242,600).  During  the  eight 
years,  terminating  the  31st  December,  1857,  the  coinage 
has  only  amounted  to  323,660,000  francs,  or  a  yearly 
average  of  40,457,000  francs  (£1,618,280).*  It  should, 

*  The  following  are  the  details,  year  by  year: — 

FRANCS.  POUNDS   STERLING. 

1850  86,458,485  3,458,339 

1851  59,327,308  2,373,092 

1852  71,918,445  2,876,738 

1853  20,099,488  803,979 

1854  2,123,887  84,955 

1855  25,500,305  1,020,002 

1856  54,422,214  2,176,888 

1857  3,809,611  152,384 


Total 323,659,743  12,946,377 


THE   PKESENT    PRODUCTION    OF    GOLD.  61 

moreover,  be  observed  that  the  coinage  of  silver  during 
the  latter  years  has  only  taken  place  in  consequence  of 
the  great  influence  exerted  in  that  respect  by  the  govern- 
ment upon  the  directors  of  the  mints.  Left  to  themselves, 
they  would  not  perhaps  have  struck  a  single  five-franc 
piece  since  1853. 

Not  only  is  much  less  silver  money  coined,  but  even 
that  which  the  country  possessed  has  been  rapidly  disap- 
pearing. The  Custom  House  returns  afford  upon  this 
subject  only  proximate  indications,  as  the  declarations  are 
not  always  exact,  though  they  nevertheless  must  be  taken 
for  authority.  Formerly,  France  imported  much  more  of 
silver  commodities*  than  she  exported.  It  appears  from 
a  report  made  in  1839  to  a  commission  on  the  currency, 
over  which  M.  Thenard  presided,  that  during  the  period 
from  the  1st  January,  1816,  to  the  1st  January,  1839, 
the  excess  of  the  importation  of  silver  over  the  exporta- 
tion amounted  to  1,822,824,818  francs  (£72,912,992). 
Nearly  the  same  proportions  were  preserved  until  1851, 
inclusively  ;  but  then  commenced  an  inverse  movement 
which  gathered  strength  every  year. 

In  1852,  the  exportation  surpassed  the  importation 
ty  2,700,000  francs  (£108,000).  In  1853,  the  excess 
amounted  to  117  millions  (£4,680,000).  It  rose  suc- 
cessively to  164  millions  (£6,560,000)  in  1854  ;  to  197 
millions  (£7,880,000)  in  1855  ;  to  284'  millions  (£11,- 
360,000)  in  1856  ;  to  362  millions  (£14,480,000)  in 

1857.  From  the  1st  January,  1852,  to  the  1st  January, 

1858,  the  total  excess  of  exportations  over  importations 
amounted  to  1,127  millions   (£45,080,000),  which  would 
be  about   two-fifths   of  the   silver   money  possessed   by 
France  a  few  years  since,  according   to  the .  opinion  of 

*  That  which  here,  and  in  the  returns  of  the  Customs,  is  named  silver 
commodities,  comprises  both  ingots  and  coins. 


62  THE   PRESENT   PRODUCTION    OF   GOLD 

many  persons.*  There  are  not  two  ways,  there  is  only  one 
way  of  explaining  these  facts  :  gold  is  imported  into 
France  in  masses,  and  takes  the  place  in  the  circulation 
formerly  filled  by  silver,  which  disappears,  because  it  is 
profitable  to  come  from  abroad  to  barter  gold  for  silver, 
on  the  footing  of  one  kilogramme  of  the  former  for  fifteen- 
and-a-half  of  the  latter,  the  proportion  established  in  the 
French  currency, — for  how  long  and  under  what  qualifi- 
cations, will  be  seen  by  referring  to  the  law  of  7  Germi?ial, 
year  11. 

The  merchant  possessing  ingots  of  gold  has  only  to 
carry  them  to  the  Mint  to  obtain  the  same  amount  in 
pieces  of  ten  francs  or  twenty  francs,  weight  for  weight, 

*  The  following  is  a  table  of  the  importations  and  exportations  of  silver 
since  1846." 

IMPORTATIONS  : 

FRANCS.  POUNDS   STERLING. 

1846  106,858,680  4,274,347 

1847  138,307,280  5,532,291 

1848  233,330,020  9,333,200 

1849  291,414,760  11,656,590 

1850  147,693,360  5,907,734 

1851  178,629,800  7,145,192 

1852  179,857,460  7,194,298 

1853  112,568,040  4,502,721 

1854  99,848,480  3,993,937 

1855  120,891,400  4,835,656 

1856  109,895,300  4,397,812 

1857  97,408,440  3,896,337 


Total  1,816,703,020  72,670,115 

EXPORTATIONS  : 

FRANCS.  POUNDS    STERLING. 

1846  60,086,980  2,403,479 

1847  84,678,220 3,387,128 

1848  19,396,560  775,862 

1849  46,847,060- 1,873,882 

1850  82,308,900  3,292,356 

1851  100,680,840  4,027,233 

1852  182,574,720  7,302,988 

1853  229,453,480  9,178,139 

1854  263,542,200  10,541,688 

1855  318,051,040  12,722,041 

1856  393,518,600  15,740,744 

1857  459,929,300  18,397,172 


Total  2241,067,900  89,642,712 


THE  PRESENT  PRODUCTION  OF  GOLD.        63 

and  fineness  for  fineness,  save  only  the  small  charge  to 
cover  the  expense  of  coining.*  In  this  way  every  kilo- 
gramme of  gold  introduced  into  France,  enters  into  the 
circulation  on  the  footing,  just  described,  of  an  equality 
with  15  J  kilogrammes  of  silver.  The  creditor  is  obliged 
to  take  it  in  discharge  of  his  claim  on  that  basis. 

From  the  very  fact  of  the  parallel  circulation  of  gold 
and  silver,  on  the  footing  of  one  of  the  former  to  fifteen- 
and-a-half  of  the  latter,  it  is  easy  to  withdraw  the  silver 
coins  from  circulation,  and  export  them,  giving  gold  in 
exchange.  From  the  moment  that  numbers  of  persons 
devote  their  time  and  capital  to  the  carrying  out  of  this 
substitution,  we  must  conclude  that  it  is  a  profitable  trade, 
for,  if  the  relation  of  1  to  15|  were  not  advantageous  for 
the  holders  of  gold,  they  would  take  good  care  not  to  carry 
on  the  operation  upon  the  large  scale  on  which  they  have 
proceeded. 

To  say  that  the  exchange  of  a  kilogramme  of  gold  for 
15  J  kilogrammes  of  silver  is  a  profitable  transaction,  is  in 
other  terms  to  prove  that  in  the  general  market  of  Eu- 
rope, or  rather  of  the  world,  the  relative  value  of  gold  and 
silver  has  undergone  a  change.  Their  relation  is  no  long- 
er that  of  1  to  15o.  Gold  is  no  longer  worth  fifteen-and- 
a-half  times  its  weight  of  the  other  metal.  In  the  French 
market,  silver  is  at  this  time  at  a  premium  ;  the  bullion 
merchants  will  pay  to  those  who  bring  them  a  certain 
quantity  of  coined  silver,  a  certain  sum  beyond  its  legal 
equivalent  in  gold  money,  and  the  amount  of  the  premium 
is  the  measure  of  the  change  which  the  relation  of  1  to 
15£  has  undergone.  This  premium  is  a  notorious  fact ;  it 
is  quoted  every  clay  ;  every  morning  the  newspapers  an- 
nounce it.  During  the  last  two  years,  it  has  varied  ordi- 
narily between  20  and  30  francs  per  1,000.  Sometimes 

*  The  charge  is  &  francs,  70  centimes  (5s.  7d.)  per  kilogramme  of  coined 
gold,  making  3,100 /rcmcs  (£124.) 


64        THE  PRESENT  PRODUCTION  OF  GOLD. 

it  has  been  lower,  but  it  has  also  risen  to  40  francs.  20, 
30,  and  40  per  1,000,  is  2,  3,  and  4  per  cent.  ;  such  a 
difference,  insignificant  after  all,  has  been  sufficient  to 
create  the  vast  movement  which  has  brought  into  France 
so  much  gold,  and  expelled  by  the  reflux  so  great  a  mass 
of  silver.  It  is  a  proof  of  the  force  with  which  the  pre- 
cious metals  everywhere  tend  to  find  their  level.  The 
fact  of  gold  being  appreciated  in  France  2  per  cent.,  or 
even  less,  is  a  sufficient  reason  why  it  should  be  precipi- 
tated upon  the  market  of  that  country  ;  on  the  contrary, 
let  silver  be  depreciated  to  the  same  extent,  and  it  will 
flow  away  with  equal  impetuosity. 

Nor  is  there  any  ground  for  surprise  at  this  kind  of 
fluidity  which  characterises  the  two  metals  :  the  simple 
truth  is  they  are  commodities  which  in  a  small  volume 
possess  a  great  value,  and  which  it  is  therefore  easy  to 
transport  a  great  distance  at  very  small  expense. 


CHAPTER  III. 

EXTEAOEDINAEY  EXPORTATION  OF  SILVEE  FEOM  THE  CIVILISED 
COUNTEIES  OF  THE  WESTEEN  WOELD  TOWAEDS  INDIA  AND  CHINA. 
—TO  WHAT  EXTENT  IT  IS  LIKELY  TO  CONTINUE. 

IT  is  not  'only  to  the  fall  of  gold  that  we  must  attribute 
the  divergence  which  has  exhibited  itself  in  the  reciprocal 
value  of  gold  and  silver  as  regards  the  proportion  of  15  J 
recognised,  under  qualifications  to  be  hereafter  explained, 
in  the  law  of  the  7  Germinal,  year  11.  Undoubtedly,  the 
enormous  production  of  gold  is  in  great  part  the  cause  of 
the  phenomenon,  but  to  a  certain  extent  the  origin  may 
be  found  elsewhere.  Simultaneously  with  the  cause  which 
has  produced  this  divergence  by  lowering  the  value  of  gold, 
there  is  another,  the  activity  of  which  cannot  be  denied, 


THE  PRESENT  PRODUCTION  OF  GOLD.        65 

which  raises  that  of  silver.  The  value  of  silver  rises  at 
present,  owing  to  the  sudden  demand  for  this  metal  for 
exportation  to  the  remote  East.  According  to  the  state- 
ments published  by  Mr.  James  Low,  and  derived  from  the 
books  of  the  Peninsular  and  Oriental  Steam  Navigation 
Company,  by  whose  agency  nearly  the  whole  of  this 
precious  freight  is  transported,  the  vessels  of  this  com- 
pany carried  from  England  to  Asia  the  sum  of  £12,118,- 
985,  in  silver,  in  1856  ;  and  of  £16,795,232  in  1857.  In 
1851  it  was  only  £1,716,100.  Besides,  from  the  ports  of 
the  Mediterranean,  there  have  been  sent  to  the  Levant 
and  the  remote  East  (India,  China,  and  the  adjacent  re- 
gions), in  1856,  £1,989,616  ;  and  in  1857,  £3,350,689. 
This  is  for  the  year  1857  a  total  of  £20,145,921,  that  is 
to  say,  of  more  than  double  the  yield  of  all  the  silver 
mines  that  supply  the  markets  of  the  Western  World,  I 
mean  of  Europe  and  America.  This  efflux  of  silver  is  in- 
dependent of  an  exportation  of  probably  one-tenth  of  the 
above  amount  in  gold,  which  has  been  going  on  during  the 
last  few  years.  It  is  true  that  we  ought  to  deduct  from 
these  exportations  of  silver  to  the  East  a  certain  quantity 
of  imports,  because,  in  these  articles,  alongside  of  the  gen- 
eral stream  there  is  always  a  certain  counter-current.  But 
we  have  reason  to  believe  that  for  the  last  few  years  it 
has  been  but  a  limited  sum  ;  at  any  rate  the  amount  is 
unknown  to  us. 

To  form  a  tolerably  correct  idea  of  the  disturbance 
which  the  former  relation  of  gold  and  silver  has  undergone, 
owing  to  the  extraordinary  demand  for  the  second  of  these 
metals,  it  may  not  be  amiss  to  recall  to  mind  what  have 
been  in  former  times  the  exportations  of  silver  from  Eu- 
rope and  America  to  the  Levant  and  the  remote  East. 

From  ancient  times,  the  commerce  of  the  civilised  na- 
tions of  the  West  with  Asia,  which  passed  by  Suez,  the 
Euphrates  or  the  Black  Sea,  involved  the  transmission  of 
5 


66        THE  PRESENT  PRODUCTION  OF  GOLD. 

a  certain  quantity  of  silver  which  the  Europeans  gave  in 
exchange  for  the  spices  and  perfumes  which  they  received. 
According  to  Pliny, *  the  quantity  of  silver  which  took 
this  direction  amounted  to  100  millions  of  sesterces,  which, 
according  to  the  tables  prepared  by  Dureau  de  la  Matte, 
in  his  Political  Economy  of  the  Romans,  f  was  equal  to 
two  millions  and  a  half  of  francs  (£100,000),  or  rather 
less  than  2,000,000  (£80,000),  as  estimated  "by  Letronne. 
In  our  day  the  trade  between  Europe  and  remote  Asia  is 
greatly  developed.  The  Europeans  draw  from  India  cot- 
ton manufactures  and  indigo  ;  from  China  certain  manu- 
factures of  silk,  and  also  tea,  the  quantity  of  which  has 
since  acquired  great  proportions.  More  recently,  other 
manufactures,  such  as  those  of  Cashmere,  and  later  still, 
some  further  articles,  including  sheeps'  wool,  have  been 
derived  from  India  ;  on  its  side  China  has  engaged  in  fur- 
nishing Europe  with  an  additional  supply  of  raw  silk. 

At  the  commencement  of  the  19th  century,  Baron 
Humboldt  estimated  that  the  mass  of  silver  sent  annually 
from  Europe  and  America  into  Asia,  both  by  sea  and  the 
land  route  which  passes  through  Southern  Siberia  and  the 
North  of  China,  including  even  that  which  remained  in 
the  Levant,  that  is  to  say,  the  Mussulman  ports  of  the 
Mediterranean,  amounted  to  25  millions  and  a  half  of 
dollars,^  or  612,000  kilogrammes  of  pure  silver,  or  137 

*  Natural  History,  Book  XII.,  Chap.  XVIII. 
f  At  the  end  of  the  1st  volume. 
\  As  follows : — 

By  the  Cape  of  Good  Hope 17£  millions  dollars. 

By  way  of  the   Levant  (a 
portion  remaining  in^the 

Levant  itself) 4          "          " 

By   Southern    Siberia    and 
the  North  of  China 4          "  " 

25|  millions  dollars. 
(Humboldt. — Essay  on  New  Spain,  Vol.  III.,  p.  413.     2nd  edition. 


THE  PRESENT  PRODUCTION  OF  GOLD.        67 

million  francs  (£5,480 ,,000),  which  was  nearly  three- 
fourths  of  the  silver  then  yielded  by  the  whole  of  the 
mines  of  America,  But  even  for  the  epoch  to  which  it  re- 
fers, this  valuation  should  be  regarded  as  altogether  for- 
tuitous ;  and,  as  an  average  for  any  particular  period,  it 
must  be  considered  as  greatly  exaggerated.*  More  re- 
cently, Mr.  Jacob  has  endeavoured  to  ascertain  what  the 
average  drain  of  silver  amounted  to  at  the  commencement 
of  the  century,  by  examining  the  valuable  records  of  the 
East  India  Company,  which  then  enjoyed  the  monopoly 
of  the  trade  of  Great  Britain  with  India  and  China,  and 
was  moreover  the  medium  through  which  the  merchants 
of  the  United  States  remitted  the  precious  metals  to 
China,  but  not  to  India.  This  conscientious  writer  esti- 
mates, that  by  the  principal  channel,  that  is  to  say  by  the 
direct  ocean  navigation,  Europe  and  America  did  not  then 
export  annually  of  the  precious  metals  to  India  and  China 
more  than  about  25  millions  of  francs  (£1,000,000),  and 
that  even  a  very  small  part  of  this  amount  was  in  gold.f 
In  admitting,  without  deduction,  that  the  trade  of  the 
Levant,  and  that  through  Siberia,  absorbed  the  sums  in- 
dicated by  Baron  Humboldt,  we  should  arrive  at  70  mil- 
lions of  francs  (£2,800,000),  in  lieu  of  137  as  the  total 
at  the  commencement  of  the  century. 

After  the  first  years  of  this  century,  notwithstanding 
the  considerable  extension  which  the  peace  soon  gave  to 
the  commerce  between  the  civilised  regions  of  the  West 
and  Asia,  the  exportation  of  silver  never  increased  to  an 
extent  to  raise  its  value,  for  the  merchants  of  the  West- 
ern World  had  discovered  other  means  of  effecting  their 

*  We  are  warranted  in  concluding,  from  the  language  of  M.  Humboldt 
himself,  in  the  second  edition  of  the  Essay  on  New  Spain,  published  in 
1827,  that,  with  his  proverbial  truthfulness,  he  has  since  discovered  that 
the  above  estimate  was  excessive,  even  for  the  first  years  of  this  century. 

f  An  Historical  Inquiry  into  the  Production  and  Consumption  of  tJie 
Precious  Metals,  Vol.  II.,  Chapter  XXIV.,  p.  196. 


68  THE    PRESENT   PRODUCTION    OF    GOLD. 

remittances.  On  this  subject,  all  the  authorities  are  unan- 
imous. The  official  returns,  published  by  Mr.  Jacob,  and 
the  other  information  furnished  by  him,  have  led  him  to 
the  conclusion  that,  from  1810  to  1830,  the  average  ex- 
portation of  the  precious  metals  by  sea,  to  Asia,  both  from 
Europe  and  America,  did  not  exceed  50  millions  of  francs 
(£2,000,000),  and  it  was  less  towards  the  end  than' at  the 
commencement  and  middle  of  the  period.  It  must,  how- 
ever, be  remembered  that  of  this  amount  a  small  portion 
consisted  of  gold.  As  respects  the  two  other  routes  indi- 
cated by  Baron  Humboldt,  that  by  land  through  Kussia, 
and  that  by  the  Levant,  including,  in  the  latter,  the  sil- 
ver which  remained  there,  as  well  as  the  portion  which 
reached  the  remote  regions  of  Asia,  Mr.  Jacob  observes 
that,  at  the  period  when  he  wrote,  in  1831,  it  was  no 
longer  necessary  to  include  in  the  estimate  the  amount  of 
silver  which  flowed  through  those  channels.  The  quantity 
of  silver  which  passed  from  Russia  into  Asia,  by  Kiachta 
and  Tobolsk,  had  fallen  to  nothing.  The  goods,  chiefly 
woollen  cloths,  that  Eussia  sold  to  the  Chinese,  were  equal 
to  the  teas  and  other  products  which  China  sold  to  Eus- 
sia, and  it  even  left  a  small  amount  due  to  the  Eussian 
merchants,  which  the  Chinese  paid  in  silver.  If,  in  their 
trade. through  Tiflis,  the  Eussians  were  obliged  to  liqui- 
date a  certain  balance  with  silver,  it  was  an  inconsiderable 
amount,  and  in  any  case  it  was,  at  least,  compensated  by 
the  remittances  which  the  Chinese  made  through  Siberia. 

As  for  the  commerce  of  the  Levant,  or  through  the  Le- 
vant, Mr.  Jacob  states  that,  at  the  time  when  he-  wrote, 
the  exchanges  of  merchandise  which  were  made  by  that 
route  balanced  one  another. 

Baron  Humboldt  himself,  always  ready  to  welcome  the 
development  of  new  facts,  acknowledged  in  the  second 
edition  of  his  Political  Essay  on  New  Spain*  published 

*  New  Spain,  edition  of  1827,  Vol.  III.,  p.  473. 


THE    PRESENT    PRODUCTION   OF    GOLD,  69 

four  years  only  before  the  work  of  Mr.  Jacob,  that  the  ex- 
portation of  the  precious  metals  to  the  destination  of  the 
Levant,  of  Hindostan,  of  China,  and  the  adjacent  regions, 
such  as  the  Indian  Archipelago,  had  considerably  dimin- 
ished, since  the  publication  of  the  first  edition  of  his  work. 
He  added,  even,  "  It  is  now  a  generally  received  opinion, 
that  Great  Britain  has  created  a  reflux  of  gold  and  silver 
from  the  peninsula  of  India  into  Europe." 

Thus,  towards  1830,  the  remittances  in  silver,  which 
the  civilised  Western  World  had  to  make  to  the  Asiatics, 
were  far  from  being  extensive  ;  they  were  certainly  much 
below  50  millions  of  francs  (£2,000,000).  More  recently, 
the  amount  was  still  further  diminished,  not  only  because 
the  merchandise  of  Europe  and  America  found  a  greater 
vent  in  Asia,  but,  above  all,  because  the  importation  of 
opium  into  China  operated  powerfully  to  change  the  bal- 
ance of  trade.  The  commercial  delegates  who  accompa- 
nied the  French  embassy  to  China,  in  some  publications, 
prepared  with  great  care,*  establish  the  fact  that  after 
1830  China  came  to  be  a  much  larger  exporter  than  im- 
porter of  silver  ;  and  they  give  as  their  estimate  for  1842 
that  China  would  have  that  year  imported  a  million  of 
dollars,  or  five  millions  and  a  half  of  francs  (£220,000), 
and  exported  11,160,000  dollars,  or  60  millions  of francs  f 
(£2,400,000)  ;  they  add  that  up  to  the  time  at  which 
they  wrote,  that  is  to  say  subsequently  to  1845,  the  com- 
merce in  opium  alone  had  caused  an  exportation  of  silver 
from  China,  to  the  amount  of  about  20  millions  of  dollars, 
or  108  millions  of  francs  (£4,320,000).  Of  late,  the  com- 
merce with  India  and  China  has  undergone  great  changes, 

*  See  these  documents  in  the  Annales  du  Commerce  Exterieur,  a  collec- 
tion issuing  from  the  department  of  commerce  :  they  are  to  be  found  under 
the  head  of  China  and  Indo-China,  Commercial  Facts,  Nos.  13  to  20,  partic- 
ularly No.  13.  Consult  especially  page  19. 

fPage  18  of  No.  13,  as  ahove. 


70        THE  PRESENT  PRODUCTION  OF  GOLD. 

or  to  speak  more  properly,  a  violent  shock.  The  Chinese 
government,  by  prohibiting  the  importation  of  opium,  has 
sought  in  vain  to  destroy  the  trade,  or  even  to  restrain  it. 
The  civil  war  which  is  convulsing  a  large  part  of  the  Chi- 
nese empire,  by  spreading  disquiet  and  alarm,  has  caused 
a  demand  for  the  precious  metals,  because  of  all  wealth 
they  are  the  most  easily  concealed.  In  India,  a  formi- 
dable insurrection  has  threatened  the  British  dominion,  from 
which  arose  a  disturbance  in  the  exchanges  between  Eu- 
rope and  those  vast  possessions  ;  and,  besides,  to  meet  the 
expenses,  England  has  been  obliged  to  despatch  large  quan- 
tities of  silver  to  the  seat  of  war.  All  these  causes  have 
operated  in  a  manner  to  attract  towards  Asia  a  much  lar- 
ger proportion  of  silver  than  previously,  and  thus  explain, 
to  a  certain  extent,  the  unexampled  increase  which  has 
during  the  last  few  years  taken  place  in  the  exportation  of 
silver  from  Europe  and  America  into  Asia. 

The  commercial  relations  of  Europe  and  Asia  have 
been,  moreover,  considerably  modified  by  other  circum- 
stances. On  the  one  hand,  the  bad  harvests  have  com- 
pelled the  people  of  Europe  to  resort  to  the  East  for  rice  ; 
whilst  on  the  other,  the  crop  of  silk  having  failed  in 
France,  Italy,  and  elsewhere,  the  silk  manufacturers,  so 
numerous  in  France,  Switzerland,  England,  and  Germany, 
have  been  obliged  to  resort  for  a  much  larger  portion  than 
heretofore  of  their  raw  material  to  China,  where  it  is  cul- 
tivated in  great  quantities  ;  and  we  all  know  that  silk  is  a 
very  costly  article. 

It  is  under  these  influences  that  the  exportation  of 
silver  from  tjie  nations  of  the  West  into  Asia  has  experi- 
enced, since  1852  and  1853,  the  enormous  augmentation 
mentioned  above. 

It  must  be  borne  in  mind  that  the  magnitude  of  the 
amount  of  silver  absorbed  annually  by  Asia,  is  of  recent 
date  ;  it  is  an  unforeseen  phenomenon  which  has  abruptly 


THE  PRESENT  PRODUCTION  OF  GOLD.        71 

presented  itself,  and  one  could  not  conscientiously  take  it 
for  a  fact  definitely  and  unchangeably  established  ;  it 
would  be  exposing  oneself  too  much  to  the  risk  of  decep- 
tion, to  assume  that  the  present  will  be  the  rule  of  the 
future. 

If  asked  formally  to  express  an  opinion  as  to  what  is 
likely  to  be  the  future  in  this  respect,  I  should  decidedly 
withhold  it  even  with  reference  to  an  early  period  ;  it 
seems  to  me  that  there  are  insurmountable  difficulties  in 
the  way  of  making  a  rational  prediction  on  the  subject,  so 
numerous,  and,  moreover,  so  fleeting  and  intangible,  are 
the  elements  which  it  would  be  necessary  to  take  into  ac- 
count. 

Doubtless  India  will  soon  return  again  entirely  under 
British  rule  ;  but  will  order  be  so  speedily  re-established, 
and  will  the  exchanges  with  that  country  immediately  re- 
sume their  accustomed  course  ?  On  this  point  it  would 
be  premature  to  predict  anything.  And  then  will  it  not 
be  necessary  to  maintain  there,  at  a  great  expense,  a  large 
European  army,  which  may,  and  indeed  must,  necessitate 
heavy  remittances  of  specie  ?  Is  it  not  also  possible  that 
India,  restored  to  peace,  and  intersected  with  railroads, 
which  were  in  active  progress  before  the  insurrection,  may 
soon  become  a  great  storehouse,  whence  Europe  may  derive 
her  cotton,  the  supply  of  which  has  been,  up  to  this  time, 
a  monopoly  in  the  hands  of  the  United  States  ?  That 
would  be  a  powerful  cause  for  the  continuance  of  the  flow 
of  silver  from  Europe  to  the  East  Indies.  On  the  con- 
trary, is  there  not  ground  for  presuming  that  the  numer- 
ous population  of  India  may  become  so  changed  in  their 
social  habits,  under  the  vigorous  administration  of  Eng- 
lishmen, as  to  accustom  themselves  to  the  consumption  of 
the  manufactures  of  Europe  and  the  United  States,  which 
would  dispense  with  the  necessity  of  their  sending  the 
precious  metals  in  payment  for  the  raw  materials  which 


72        THE  FRESENT  PRODUCTION  OF  GOLD. 

are  furnished  by  India,  and  thus  tend  to  restore  the  ex- 
changes to  nearly  the  state  in  which  they  were  about  the 
year  1845  ? 

As  respects  China,  there  is  room  for  similar  observa- 
tions, but  in  a  sense  the  opposite  of  each  other.  China 
offers  to  Europe  raw  materials  of  great  value,  and,  espe- 
cially, as  has  been  seen,  silks  in  immense  quantities,  as 
well  as  that  article  which  has  taken  so  important  a  place 
in  the  alimentary  habits  of  the  two  great  Anglo-Saxon 
communities.  The  exportation  of  tea  from  China  to  Eng- 
land, and  its  numerous  dependencies,  and  also  to  the  Uni- 
ted States,  has  only  acquired  its  interesting  proportions 
within  the  period  of  a  century  ;* — but  in  our  day  it  is  very 
considerable,  and  is  constantly  increasing.  In  return,  the 
products  of  Western  industry  are  trying  to  adapt  them- 
selves to  the  habits  of  the  Chinese  consumer  :  aided  by  a 
recourse  to  the  various  productions  of  India,  will  they  be 
sufficient  to  balance  the  amount  of  the  productions  fur- 
nished by  China  to  the  Western  world  ?  When,  one  way 
or  another,  the  civil  war  which  now  ravages  the  Celestial 
Empire  shall  have  been  brought  to  an  end,  and  when  the 
campaign  undertaken  by  England  and  France  to  compel 
the  Chinese  government  to  renounce  its  system  of  isola- 
tion shall  have  succeeded,  is  it  not  credible  that  the  350 

*  The  quantity  of  tea  sold  by  the  East  India  Company  did  not  exceed  a 
million  of  kilogrammes  (2,200,000  Ibs.)  until  about  1750.  From  1748  to 
1759,  the  average  annual  sales  of  the  Company  were  2,558,081  Ibs.  It  is 
true  that  the  Dutch  and  other  nations  also  imported  some  tea  from  China. 
Of  the  above  2,558,081  Ibs.,  a  certain  portion  was  exported,  which  so  far 
reduced  the  amount  retained  for  consumption  at  home.  At  present  the 
quantity  consumed  in  the  United  Kingdom  amounts  to  63,295,643  Ibs.  The 
23rd  volume  of  the  large  statistical  work  of  Mr.  John  Mac.Gregor  contains, 
on  the  history  of  the  trade  in  tea,  a  chapter  full  of  interesting  details,  to 
which  the  reader  is  referred  (page  292).  The  Annals  of  Foreign  Trade 
(No.  983  of  the  3rd  series  of  the  Miscellaneous  Intelligence,  Ci  ,ina,  and  Indo- 
China,  Commercial  Facts,  No.  24,)  estimates  at  169,443,786  Ibs.  the  total 
exportation  of  tea  from  China  in  1855. 


THE  PRESENT  PEODUCTION  OF  GOLD.        73 

or  400  millions  of  industrious  men,  attached  to  the  enjoy- 
ments of  life,  comprised  in  the  Chinese  provinces,  will  be 
inclined  to  adapt  to  their  usages  a  multitude  of  commodi- 
ties with  which  the  trade  of  Europe  and  America  can 
supply  them  ?  In  assuming  it  to  be  probable  that  such 
will  be  the  case,  how  long  will  it  take  to  put  this  new 
state  of  things,  this  vast  system  of  exchanges  between 
China  and  the  people  of  the  Western  World,  on  such  a 
footing  that  the  productions  bartered  between  the  two 
parties  shall  balance,  or  nearly  so,  one  another  ?  On  this 
subject  we  can  only  hazard  conjectures.  It  is  clear,  how- 
ever, that  the  actual  state  of  the  exchanges  which  is  bal- 
anced by  the  annual  remittance  to  Asia  of  from  400  to 
500  millions  of  francs  (from  16  to  20  millions  sterling), 
by  the  Europeans  and  Americans,  can  only  be  regarded  as 
accidental,  and  'that  it  has  not  yet  received  that  sanction 
from  experience,  without  which  the  facts  ought  not  to  be 
made  the  grounds  of  conclusions  by  enlightened  men,  or 
of  the  calculations  of  governments. 


CHAPTER   IV. 

FEANCE  BEEVES  TEMPOEAEILY  AS  A  PAEACHTJTE  TO  EETAED  THE 
FALL  OF  GOLD. 

IT  is  at  first  sight  surprising  that  a  production  of  gold  so 
vast,  so  colossal  as  that  which  has  been  just  described,  in 
comparison  with  all  that  has  been  seen  previous  to  our 
day,  should  not  have  produced  a  greater  fall  of  gold  rela- 
tively to  the  other  precious  metal.  The  surprise  redoubles 
if  we  take  into  account  the  enormous  increase  that  has 
taken  place  in  the  demand  for  silver  in  the  European 
market,  or,  more  properly  speaking,  in  the  whole  Western 


74        THE  PRESENT  PRODUCTION  OF  GOLD. 

World,  for  exportation  to  the  East.  But  here  a  powerful 
cause  has  intervened  to  retard  temporarily  the  fall  of  gold. 
France  is  a  market  which  has  hitherto  offered  to  the  gold 
of  the  new  mines  an  indefinite  outlet,  on  the  basis  of  one 
kilogramme  against  15^  silver  ;  for  the  foreigner  who 
owes  a  Frenchman  a  certain  number  of  francs.,  that  is  to 
say,  a  certain  number  of  times  4|  grammes  .of  silver,  ac- 
quits himself  legally  in  paying  him  the  same  number  of 
times  29  centigrammes  of  gold,  a  quantity  15^  times 
smaller.  As  to  the  bullion  merchant  who  wants  to  ex- 
change his  gold  for  silver,  he  obtains  it  on  nearly  the 
same  terms,  for,  beyond  the  quantity  indicated  by  the 
relation  of  1  to  15J,  he  has  only  to  pay  the  premium,  and 
of  necessity  up  to  this  moment  it  has  been  but  slight,  and 
must  continue  so  some  time  longer,  for  a  reason  easy  to 
perceive.  So  long  as  much  silver  remains  in  France, 
persons  residing  there  who  may  receive  coins  of  this  metal, 
will  think  themselves  fortunate  to  exchange  them  for  gold 
at  a  small  premium  beyond  the  relation  established  by  the 
law  of  the  7  Germinal  year  11,  because  in  the  payments 
which  they  have  to  make  they  could  not  compel  their 
creditors  to  take  them  for  more  than  the  proportion  of 
gold  indicated  by  this  law,  viz.,  1  against  15J. 

Such  is  the  actual  effect  of  the  provisions  of  the  law 
of  the  7  Germinal,  year  11.  We  will  not  at  present  in- 
quire whether  the  intention  of  the  legislator  was,  that 
under  the  circumstances  which  now  present  themselves, 
this  comparative  value  of  gold  and  silver  should  be  main- 
tained ;  it  is  a  subject  to  be  hereafter  discussed.  But  the 
truth  is,  that  so  long  as  the  provisions  of  the  law  of  the 
year  11,  on  this  point,  are  allowed  to  remain,  and  so  long 
as  France  shall  continue  to  offer  great  masses  of  silver, 
the  merchant  will  find  it  easier  to  barter  his  gold  in  that 
country  for  the  other  metal,  on  terms  which  will  deviate 
little  from  those  prescribed  in  the  year  11.  It  follows, 


THE    PRESENT    PRODUCTION    OF    GOLD.  75 

also,  whilst  this  state  of  things  lasts,  that  it  will  be  im- 
possible, at  London,  Brussels,  Hamburg,  or  even  at  New 
York,  or  any  other  great  centre  of  commerce,  for  gold  to 
fall  much  below  15^  times  its  weight  in  silver.  It  is  from 
the  same  reason  that  if,  at  any  moment,  when  the  price 
of  corn  tended  strongly  to  decline,  a  Paris  merchant 
bought  in  the  open  market  all  the  corn  brought  to  him  at 
20  francs  the  hectolitre,  it  would  be  impossible  that  at 
the  market  of  Saint  Denis  the  quotation  should  greatly 
deviate  from  the  same  price.  But  the  aspect  of  affairs 
will  be  very  different  from  the  day  when  the  movement 
which  at  present  attracts  the  silver  of  France,  shall  have 
led  to  the  exportation  from  our  territory  of  nearly  all  our 
five-franc  pieces,  and  when,  consequently,  this  money 
shall  have  become  so  rare  as  to  render  it  impracticable,  or 
even  difficult  to  exchange  a  kilogramme  of  gold  against 
15^  kilogrammes  of  silver.  From  that  moment  the  fall 
in  gold  will  be  rapid.  In  a  word,  if,  down  to  the  present 
time,  the  immense  production,  of  which  Australia  and 
California  have  been  the  theatre,  has  not  produced  a 
greater  fall  in  the  value  of  gold,  it  is  France  which  is  the 
cause.  It  is  she  that  has  retarded  the  depreciation  of 
gold.  She  plays,  in  relation  to  this  metal,  the  part  of  a 
parachute,  and  she  plays  it  at  her  own  expense  ;  she  will 
understand  it  well  when  the  great  fall  occurs  ;  but  then 
it  will  be  too  late. 

That  the  premium  on  silver  should  have  reached  even 
4  per  cent.,  under  the  circumstances  in  which  the  trade 
in  the  precious  metals  is  placed,  seems  to  me  to  indicate 
the  force  with  which  gold  tends  towards  a  depreciation  ; 
and  they  who  argue  from  the  slightness  of  the  premium, 
that  there  is  little  ground  for  anticipating  any  great  fu- 
ture change,  seem  to  me  to  fall  into  a  singular  error. 

We  know  that  what  is  now  to  be  seen  taking  place  in 
silver,  occurred  a  few  years  previously  in  gold.  Gold  was 


76  THE   PRESENT    PRODUCTION   OF    GOLD. 

at  a  premium  in  the  French  market  ;  at  the  same  time 
that  the  coinage  of  this  metal  had  fallen  to  an  insignifi- 
cant sum,  and  the  amount  which  had  been  in  circulation 
in  France  was  escaping  abroad.  The  returns  of  the  Cus- 
tom-House  show  that  from  the  1st  January,  1816,  to  the 
1st  January,  1839,  the  exportation  of  gold  exceeded  the 
importation  by  541,000,000  francs  (£21,640,000),  with- 
out counting  that  which  travellers  carried  with  them. 
During  this  period,  the  relative  value  of  gold  remained 
nearly  fixed  at  15|  times  that  of  silver,  instead  of  the 
proportion  of  15J,  indicated  by  the  law  of  the  7  Germinal, 
year  11.  Now  15|  in  relation  to  15J,  represents  only  a 
deviation  of  1J  per  cent.*  Such  a  slight  divergence  from 
the  legal  proportion,  sufficed,  however,  to  cause  the  disap- 
pearance of  gold  from  the  circulation,  and  to  lead  to  the 
exportation  of  the  larger  portion  of  it.  This  proves  how 
small  a  difference  suffices  to  effect  the  displacement  of  the 
precious  metals. 


CHAPTER  V. 

WHETHER  THE  EXTRAORDINARY  PRODUCTION  OF  GOLD  OUGHT  TO  BE 
CONSIDERED  AS  AN  EPHEMERAL  ACCIDENT.— THE  CRUSHING  OF  THE 
QUARTZ  VEINS.-MINES  IN  SIBERIA  AND  ELSEWHERE. 

THE  new  gold  mines,  will  they  continue  to  be  what  they 
are  ?  The  abundance  of  metal,  will  it  remain  indefinitely 
the  same,  and  will  there  be  always  the  same  facilities  for 
working  it  ?  To  sum  up  in  a  word,  will  the  production 
remain  as  great,  or,  like  a  meteor,  will  it  dazzle  for  an 

*  In  this  interval,  the  value  of  gold  never  rose  above  158%oo  or  15R1/ioo, 
excepting  during  a  part  of  1829,  and  the  four  following  years,  1830-1-2-3. 
It  may  be  concluded,  at  least  for  the  last  four  years,  that  the  agitations  in 
France  were  the  cause  of  this  rise.  In  times  of  alarm,  there  is  usually  an 
extraordinary  demand  for  gold,  owing  to  the  facih'ty  with  which  it  can  be 
concealed. 


THE  PRESENT  PRODUCTION  OF  GOLD.        77 

instant,  suddenly  to  disappear  ?  On  this  subject,  there 
might  be  room  for  a  long  controversy,  of  which  the  result 
must  still  be  liable  to  some  uncertainty,  owing  to  the 
want  of  sufficiently  precise  and  authentic  information. 
However,  we  are  warranted  in  saying  that  the  continuance 
of  a  large  production  presents  itself  in  the  perspective, 
surrounded  with  a  very  great  probability. 

Eminent  geologists,  at  the  time  when  the  first  news  of 
the  marvels  of  California  arrived,  remarked,  with  truth, 
that  the  alluvial  deposits  in  which  gold  is  found,  and  on 
which  to  the  present  day  nearly  all  the  successful  workings 
have  been  carried  on,  are  liable  to  speedy  exhaustion. 
They,  on  that  occasion,  reminded  us  that  many  countries 
have  had,  in  the  earlier  period  of  their  civilisation,  mines 
of  gold  and  silver,  and  that  after  a  short  time  all  remains 
of  them  disappeared,  even  to  the  extent  of  leaving  no 
traces  of  their  existence  in  the  traditions  of  the  inhabi- 
tants. Might  not  this  be  taken  as  a  warning  of  the  early 
exhaustion  of  the  mines  of  California  and  Australia  ? 

There  are  very  striking  calculations  to  be  produced  in 
an  opposite  sense.  Supposing  that  the  soils  the  most  ad- 
vantageously workable  of  these  regions  yield  in  gold  the 
huridred-thousandth  part  of  their  weight,*  it  would  be 
necessary,  for  obtaining  one  kilogramme  of  metal,  to 
wash  50  cubic  metres  of  gravel  or  sand.  It  follows  that, 
supposing  an  auriferous  bed  to  be  of  the  thickness  of  a 
metre  (about  39  inches),  then  a  hectare  (about  2|-  acres) 

*  This  is  the  quality  or  rather  the  yield  (which  is  very  different  when 
worked  in  an  inferior  manner)  of  the  rich  fields  of  production  in  Siberia. 
In  the  Oural  mountains  they  wash  with  success  sands  which  contain  only  a 
fourth  or  a  fifth  of  the  above  proportion,  that  is  to  say,  one  kilogramme  in 
400,000  or  500,000.  In  the  valley  of  the  Rhine,  the  most  favoured  spots, 
those  which  the  gold-washers  hunt  for,  and  on  which  they  concentrate  all 
their  efforts,  contain  only  1  kilogramme  in  7- millions.  According  to  various 
accounts,  the  yield  of  good  soils  in  California  and  Australia  is  often  as  much 
as  1  in  100,000. 


78        THE  PRESENT  PRODUCTION  OF  GOLD. 

will  have  been  exhausted  with  the  extraction  of  200  kilo- 
grammes, and  that  thus  an  annual  extraction  of  120,000 
kilogrammes  of  fine  gold,  which,  on  the  basis  established 
by  the  law  of  the  year  11,  would  be  equal  to  400  millions 
of  francs  in  gold  coins  (£16,000,000),  would  exhaust  600 
hectares  ;  and  60;000  hectares  would  be  sufficient  for  an 
extraction,  at  this  rate,  of  a  century.  Now  60,000  hec- 
tares are  only  half  the  area  of  one  French  department, — 
a  very  small  space  in  comparison  with  the  total  superficies 
of  countries  so  vast  as  Australia  and  California.  The 
conditions  in  which  the  deposits  of  ore  are  found  in  Cali- 
fornia and  Australia  are  such  that  it  is  not  a  very  sanguine 
view  to  suppose  that  in  each  of  these  countries  alluvial 
ground  will  be  found,  equal  to  60,000  hectares  of  deposits 
of  a  metre  in  thickness,  and  of  the  richness  of  1  to  100,- 
000.  There  are  several  ways  in  which  such  a  field  of  op- 
erations may  be  arrived  at,  for  it  must  be  borne  in  mind 
that  frequently  these  auriferous  banks  are  much  more  than 
a  metre  in  thickness  ;  nor  must  it  be  forgotten  that  their 
richness  may  greatly  exceed  that  of  1  to  100.000.  In 
fact  this  return  is  not  the  minimum  below  which  the  ex- 
traction would  necessarily  cease  to  be  profitable  ;  it  is 
very  far  from  it.  There  have  been  worked,  and  are  now 
being  worked,  in  all  the  auriferous  regions,  some  banks,  the 
produce  of  which  is  not  one-fifth  or  one-sixth  as  much  as 
the  above. 

It  will  be  readily  conceived,  after  the  considerations  I 
have  submitted  to  the  reader,  that  we  should  soon  exhaust 
the  deposits  in  those  countries  where  the  auriferous  ground 
was  very  limited  in  extent,  and  was  only  met  with  in  the 
bottoms  of  valleys.  But  that  is  not  the  case  in  California, 
or  Australia.  The  golden  alluvions  are  there  spread  over 
a  far  wider  space ;  they  are  found  not  only  on  the  banks 
of  rivers,  and  in  their  beds,  but  are-scattered  over  the  sur- 
face of  vast  plains. 


THE  PRESENT  PRODUCTION  OF  GOLD.        79 

It  has  been  seen  also  that  hitherto  the  miners  of  Aus- 
tralia and  California  have  confined  themselves  to  the  more 
tempting  deposits,  that  they  have  been  skimming  the 
cream,  and  that  henceforth  they  must  expect  their  work 
to  be  much  less  productive.  There  is,  undoubtedly,  some 
truth  in  this  observation.  But  then  it  must  also  be  re- 
membered that  they  have  not  yet  explored  the  whole  sur- 
face, and  that  there  is  reason  to  believe  that,  in  California 
and  Australia,  there  are  many  rich  and  extensive  deposits 
still  to  discover  ;  indeed,  they  are  constantly  in  the  course 
of  discovery.  It  may  also  be  urged  that,  if  the  natural 
facilities  for  extraction  do  not  remain  unimpaired,  the  pro- 
cesses of  working  may  be  so  improved  as  to  compensate,  in 
some  degree,  for  the  diminished  fertility  of  the  mines ; 
and  this  improvement  is  not  something  appertaining  to 
the  remote  future  ;  it  is  a  fact  which  is  realised  every  day. 
The  report  of  Dr.  Trask  shows  a  marked  increase  in  the 
productive  force  of  the  miner  between  1852  and  1854. 
On  the  contrary,  in  Australia,  in  the  colony  of  Victoria, 
the  most  important  of  all  the  mining  districts,  the  com- 
mission which  presented  the  report  already  referred  to  de- 
scribes the  deposits  as  declining  in  richness  continually 
from  1852  to  1854 ;  but,  at  the  same  time,  it  reckoned 
on  the  improved  processes  of  extraction  for  compensating 
to  some  extent  the  impoverishment  of  the  mines,  even  if 
the  falling  off  were  to  be  permanent,,  which  is  doubtful  ; 
subsequently  to  this  report,  that  is  to  say  in  1855  and 
1856,  the  results  of  the  workings  appear  to  have  improved 
in  Australia. 

It  is  a  fact,  however,  upon  which  there  is  now  hardly 
room  to  doubt,  that  the  miners  will  no  longer  confine 
themselves  to  the  washing  of  the  metal  from  the  alluvions 
where  nature  had  deposited  it,  after  having  herself  pul- 
verised and  ground  the  rocky  mass  in  which  it  had  been 
imprisoned.  In  California  and  Australia,  but  especially 


80        THE  PRESENT  PRODUCTION  OF  GOLD. 

the  former  of  these  countries,  the  industry  of  man,  armed 
with  a  powerful  instrument,  does  not  fear  to  attack  the 
veins  of  quartz  which  conceal,  in  scattered  grains,  the 
precious  metal.  The  alluvions  themselves  are  worked  with 
more  intelligence  and  a  better  organisation  of  labour  than 
heretofore.  Companies,  more  or  less  powerful,  have  con- 
structed or  are  constructing  canals  to  bring  the  water  re- 
quired for  washing  the  auriferous  earth.  A  better  division 
of  labour  has  been  established  among  the  mining  popula- 
tion, and,  in  fine,  the  utensils  and  the  processes  of  wash- 
ing are  greatly  improved. 

•  If  it  were  necessary  to  sum  up  with  the  expression  of 
an  opinion  on  the  future  of  Australia  and  California,  I 
should  say,  that,  even  if  it  were  admitted  to  be  quite  im- 
probable that  the  production  of  the  precious  metal  which 
has  been  maintained  to  our  day  should  be  permanent,  or, 
to  repeat  the  same  thing  in  other  words,  that  the  average 
yield  of  a  day's  labour  should  be  undiminished,  it  is  diffi- 
cult not  to  admit  our  belief  that  the  mines  of  thdse  two 
countries  must,  for  yet  a  long  series  of  years,  produce  gold 
in  such  quantities  and  on  such  conditions  as  to  render  a 
marked  decline  in  its  value  inevitable.  This  is  exactly  as 
if  we  said  that  in  all  those  countries  where,  as  in  England, 
gold  is  unquestionably  the  monetary  standard,  as  well  as 
in  those  where,  as  in  France,  it  is  left  in  possession  of  this 
attribute,  there  is  ground  for  predicting  a  progressive  rise 
in  the  price  of  articles  of  subsistence  and  raw  materials. 
The  price  of  manufactures  would  rise  in  the  same  pro- 
portion, if  the  improvements  in  machinery,  much  more 
easily  effected  in  manufacturing  than  in  agricultural  pro- 
cesses, did  not  partially  or  completely  counteract  this  ris- 
ing tendency. 

In  the  preceding  statement  I  have  hardly  alluded  to 
the  gold  mines  of  Kussia,  the  production  of  which  has  hith- 
erto remained  considerably  below  that  of  the  mines  of 


THE   PRESENT    PKODUCTION    OF    GOLD.  81 

Australia  and  California,  although  in  one  year  they  have 
yielded  30,000  kilogrammes,  or  upwards  of  100  millions 
of  francs  (£4,000,000).  The  two  following  facts,  how- 
ever, ought  not  to  be  lost  sight  of: — 1st.  The  auriferous 
deposits  of  the  Northern  and  Eastern  regions  of  the  Kus- 
sian  Empire  are  literally  of  a  gigantic  extent  ;  from  all 
the  information  we  at  present  possess  they  would  appear 
to  be  even  the  largest  in  the  world.  2ndly.  In  richness 
— by  which  I  mean  the  quantity  of  gold  contained  in  a 
cubic  metre  of  the  sand  or  gravel  composing  the  beds  of  the 
auriferous  alluvions — they  are  hardly  surpassed  by  those  of 
Australia  and  California. 

The  mines  of  Siberia  have  had  this  advantage,  that 
eminent  scientific  men  have  made  them  the  subject  of 
their  most  serious  study,  having,  for  that  purpose,  person- 
ally visited  those  regions.  At  the  request  of  the  Emperor 
Nicholas,  Baron  Humboldt  himself  made  in  1829,  in  com- 
pany with  some  very  distinguished  savans,  a  long  journey 
in  the  countries  through  which  extend  the  chains  of  the 
Oural  and  Altai  mountains,  and  from  that  time  he  has 
carefully  collected  and  condensed  all  the  information  that 
has  transpired  respecting  this  quarter  of  the  world  ;  and 
hence  sprung  his  work  upon  Central  Asia,  published  in 
1843.  Towards  this  latter  period  an  English  geologist  of 
deserved  celebrity,  Sir  Koderick  Murchison,  explored  a 
portion  of  the  gold  mines  of  Russia,  the  results  of  which 
he  has  published.'* 

For  a  series  of  years  the  Eussian  government  has  been 
careful  to  make  Europe  directly  acquainted  with  all  that 
passes  in  these  auriferous  regions.  A  special  publication, 
which  has  been  for  some  years  suspended,  I'Annuair*  des 

*  The  reader  is  referred  to  an  address  delivered  to  the  Geographical 
Society  of  London,  the  27th  of  May,  1844,  by  Sir  Roderick  Murchison,  then 
President  of  the  Society. — (Address  to  the  Anniversary  Meeting  of  the  Royal 
Geographical  Society.^ 
6 


82        THE  PRESENT  PRODUCTION  OF  GOLD. 

Mines  de  Hussie,  contained  periodically  on  this  subject 
some  reports  and  memoirs  of  very  great  interest.  We  thus 
know  that  the  region  occupied  by  the  chain  of  the  Oural, 
which  is  that  to  which  for  the  first  years  the  mining  oper- 
ations were  confined,  offered  an  immense  field  for  the  in- 
dustry of  man,  for  this  chain  is  not  less  than  1,900  kilo- 
metres (about  1.200  miles)  in  length  ;  but  to  the  East  of 
the  Oural,  in  Siberia,  the  gold  regions  expand  to  prodigious 
dimensions.  From  the  Kamschatka  and  the  Ouskoi 
mountains,  the  foot  of  which  is  washed  by  the  Pacific 
Ocean,  as  far  as  the  meridian  of  Perm,  to  the  West  of  the 
Oural,  over  a  distance  which  embraces  the  half  of  a  circle 
which  would  be  described  in  making  the  circuit  of  the 
globe  on  those  latitudes,  the  auriferous  deposits  are  dis- 
tributed in  numerous  groups  and  over  a  large  surface,  and 
the  zone  over  which  they  are  spread  is  of  an  average  width 
of  900  kilometres  (about  550  miles).  Baron  Humboldt 
has  remarked  that  the  presence  of  gold  over  this  immense 
surface  is  one  of  the  phenomena  the  most  general  to  be 
found  on  the  globe.  Moreover,  the  richness  of  these  au- 
riferous alluvions  is  very  decidedly  superior  to  that  of 
those  found  in  the  Oural. 

With  the  new  and  improved  spirit  displayed  by  the 
Eussian  administration  since  the  accession  of  the  present 
Emperor,  and  with  the  more  active  impulse  given  to  in- 
dustry in  this  vast  Empire,  we  may  reasonably  expect  that 
the  production  of  gold  in  Northern  Russia  will  henceforth 
experience  a  large  increase.  The  Emperor  Nicholas,  in 
1849,  (edict  of  the  14th-26th  April),  raised  an  obstacle 
to  the  development  of  the  mining  operations  of  Siberia. 
He  subjected  them  to  a  progressive  tax;  which  for  the 
larger  undertakings,  those  which  returned  upwards  of  40 
poods  of  metal  (655  kilogrammes  or  2,170,000  francs, 
£86,800),  amounted  to  30  or  35  per  cent,  on  the  gross 
produce,  independent  of  the  special  tax  for  police  pur- 


THE    PRESENT    PRODUCTION    OF    GOLD.  83 

poses  :  for  the  great  undertakings,  this  was  9  to  10  rou- 
bles (36  to  40  francs — 30s.  to  33s.  4d.)  the  pound  of  metal 
of  the  Mint  standard.  Such  heavy  charges  could  not  fail 
to  limit  the  extraction.  Previously  the  State  levied  on 
private  enterprise  a  tax  of  15  per  cent.,  independently  of 
a  rate  for  the  police,  and  which  was  sufficiently  heavy  ; 
these  regulations  are  still  in  force  in  the  mining  districts 
of  the  Oural. 

This  is  not  the  place  to  inquire  whether  the  govern- 
ment of  the  Emperor  Nicholas  had  good  reasons  for  in- 
creasing to  this  extent  the  amount  of  taxation  imposed 
upon  the  miners  of  Siberia.  At  the  period  when  the  duty 
of  from  30  to  35  per  cent,  was  established,  there  might 
have  been  good  arguments  to  justify  it.  But  with  the 
competition  which  the  mining  operations  of  California  and 
Australia  offer  to  those  of  Siberia,  these  high  duties  cannot 
be  sustained.  It  is  the  interest  of  Kussia  to  bring  her 
gold  to  market  before  the  fall  assumes  a  more  decided 
character,  for  she  will  otherwise  incur  a  loss  by  retarding 
the  production  of  the  metal. 

It  is  not  out  of  place  here  to  allude  to  some  contin- 
gencies which,  in  addition  to  the  production  of  new  gold, 
may  cause  an  increased  quantity  to  flow  towards  the 
Christian  nations.  There  is  one  among  others  of  which  I 
may  say  that  it  is  not  altogether  without  probability  ;  I 
allude  to  the  breaking  down  of  the  barrier  of  exclusive- 
ness,  which  has  hitherto  completely  shut  out  the  nations 
of  the  West  from  the  Empire  of  Japan.  The  tendency 
of  events  passing  in  the  remote  east,  the  direct  steps  that 
have  been  taken  by  the  American  and  Russian  squadrons 
with  the  Japanese  government,  and  the  treaties  concluded 
in  consequence  of  these  visits,  not  only  with  Russia  and 
the  United  States,  but  also  with  Holland,  all  presage  for 
an  early  period  the  establishment  of  important  relations 
between  the  Japanese  Archipelago  and  the  Christian 


84 


THE    PRESENT    PRODUCTION    OF    GOLD. 


world.  Now,  the  information  we  already  possess  relative 
to  Japan,  leaves  no  room  to  doubt  that  gold  is  there  at  a 
comparatively  low  price  ;  persons  go  so  far  as  to  say  that 
the  relation  between  gold  and  silver  in  Japan  is  hardly 
above  that  of  1  to  3.  Such  is,  for  instance,  the  statement 
in  a  letter,  dated  the  6th  July,  1857,  addressed  by  the  Con- 
sul of  the  United  States,  at  Simoda,  Mr.  Townsend  Har- 
ris, to  his  colleague  at  Hong  Kong.  He  there  very  expressly 
states  that  the  relation  between  gold  and  silver  is  only  as 
1  to  S^.  The  sole  object  of  the  letter  is  to  bring  the  fact 
to  the  knowledge  of  the  Americans  who  trade  with  China, 
in  order  that  they  may  profit  by  it,  so  that,  from  this  mo- 
ment, they  possess  the  faculty  of  doing  so.  Can  there  be 
a  doubt,  then,  that  there  will  soon  be  an  exportation  of  a 
large  portion  of  the  gold  to  be  found  in  Japan  ?  It  is 
well,  however,  to  add  that  the  quantity  of  this  gold  is  not 
known,  and  that  probably  it  is  not  very  considerable. 

It  is  not  irrelevant  here  to  add  that  a  Mexican  prov- 
ince, which  is  supposed  to  conceal  very  rich  mines  of  gold, 
comparable  to  the  deposits  of  California  itself,  that  of 
Sonora,  appears  destined  to  share  the  same  fate  as  Cali- 
fornia, of  which  it  is  the  neighbour,  by  falling  into  the 
hands  of  the  United  States.  There  are  many  indications 
which  warrant  the  belief  that  this  event  is  not  distant. 
If  it  were  to  occur,  and  if,  moreover,  the  mines  of  Sonora 
were  to  justify  the  reputation  they  have  acquired  with 
very  enlightened  travellers,  whose  testimony  has  been  fa- 
vourably quoted  by  Baron  Humboldt  himself,*  we  might 
expect  a  considerable  force  added  to  the  effects  produced 
by  California  and  Australia  ;  for  the  inhabitants  of  the 

*  Essay  on  New  Spain,  Vol.  II.,  p.  240.  See  also  the  work  of  M.  Saint 
Clair  Duport, — Production  des  Metaux  Precieux  au  Mcxique,  p.  202 ;  and 
that  of  M.  Duflot  de  Mofras, — Exploration  du  Territoire  de  V  Oregon,  des 
Calif ornies,  et  de  la  mer  vermeille  pendant  les  annees  1840,  1841r  and  1842. 
Volume  I.,  p.  206  to  212. 


I 


THE  PRESENT  PRODUCTION  OF  GOLD.        85 

United  States  would  not  display  less  energy  and  enter- 
prise there  than  they  have  already  exhibited  in  the  valleys 
of  the  Sacramento  and  the  San  Joaquim. 

Under  circumstances  similar  to  those  which  I  have 
rapidly  enumerated,  the  only  way  to  prevent  a  fall  in  the 
value  of  gold,  and  a  consequent  rise  in  the  price  of  com- 
modities, would  be  the  discovery  of  a  new  demand,  equal 
in  extent  to  the  increased  supply  thrown  upon  the  mar- 
kets of  the  Western  World.  Thus  only,  the  relation  of 
supply  and  demand  remaining  the  same,  would  people  be 
able  to  procure  the  precious  metal  on  the  same  conditions 
as  at  present,  that  is,  they  would  be  obliged  to  give  in 
exchange  the  same  quantity  of  corn  or  labour.  Is  the 
opening  of  such  an  outlet  possible  or  probable  ?  Let  us 
investigate  the  subject. 


SECTION    IT. 

ON  THE  NEW  OUTLET  THAT  MAY  BE  EXPECTED 
FOR  THE  PRODUCTION  OF  THE  NEW  GOLD 
MINES,  AND  WHETHER  IT  WILL  BE  IN  PRO- 
PORTION TO  THE  EXTENT  OF  THIS  PRO- 
DUCTION. 


WHAT  are  the  additional  purposes  to  which  gold  may  be 
applied,  and  will  they  be  sufficiently  extensive  to  balance 
the  increased  production  ?  And,  first,  as  to  the  place  it 
will  find  in  the  monetary  system  of  the  various  countries 
where  at  present  paper  forms  the  principal  instrument  of 
exchange,  and  which  are  desirous  of  giving  to  their  circu- 
lation the  ballast  of  a  greater  quantity  of  metal,  and 
particularly  of  gold.  The  United  States  and  Austria 
are  especially  cited  as  being  of  this  category.  Turkey  is 
also  spoken  of  as  a  country  where  money  of  every  kind  is 
very  rare.  In  the  next  place  we  are  reminded  of  the 
necessity  which  exists  in  those  countries  sufficiently  sup- 
plied with  a  metallic  currency  of  calling  in  and  restoring 
the  coinage ;  that  is,  of  replacing  the  portions  of  each 
coin  which  have  been  lost  in  circulating  from  hand  to 
hand,  and  which,  in  the  aggregate,  amounts  to  a  large 
sum  ;  it  is  called  the  wear  and  tear.  With  reference 
to  all  the  countries  where  gold  is  used  for  money,  we  are 
told  also  that  the  quantity  of  coins  in  circulation  must  be 
augmented  in  proportion  to  the  constantly  increasing  pop- 
ulation, and  to  the  progressive  movement  of  commercial 


NEW    OUTLET    FOR    GOLD.  87 

affairs  throughout  the  civilised  world.  Then  it  is  said 
that  the  growing  luxury  will  call  for  the  fabrication  of  a 
great  quantity  of  jewellery,  of  plate,  and  gold  lace  ;  that 
to  this  must  be  added  an  increase  in  gilding,  of  which  so 
much  is  in  use,  especially  in  Paris.  Some  other  modes 
are  cited,  by  which  we  are  told  a  certain  proportion  of 
metal  is  to  be  absorbed  ;  as,  for  instance,  by  hoarding  and 
by  shipwrecks. 

Let  us  try  to  form  an  idea  of  the  quantity  of  gold  that 
may  be  required  for  all  these  different  destinations.  Let 
us  inquire  whether  the  outlets  which  they  offer,  naturally 
and  without  effort,  to  this  precious  metal,  be  likely  to  be 
such  that  a  large  floating  mass  of  it  will  not  remain  upon 
the  market ;  for  if  it  be  otherwise,  if  the  various  employ- 
ments which  have  just  been  enumerated,  should  not  be 
sufficient  to  absorb  nearly  the  whole  quantity  of  gold  to 
be  produced,  and  that,  in  spending  it,  almost  on  the  same 
conditions  as  at  present,  that  is  to  say,  in  exchanging  it 
for  nearly  the  same  quantity  of  corn  or  labour,  the  conse- 
quence will  be  inevitable  :  gold,  to  find  a  market,  will  be 
obliged  to  submit  to  the  law  which  governs  all  commodi- 
ties in  excess — to  lower  its  price  ;  in  other  words,  the 
phenomenon  of  a  rise  in  the  price  of  raw  materials,  articles 
of  subsistence,  and  merchandise,  will  infallibly  present  it- 
self. 


CHAPTER  I. 

OF  THE  OUTLET  AFFORDED  BY  THOSE  COUNTRIES  WHICH  AT  PRESENT 
HAVE  EVIDENTLY  AN  INSUFFICIENT  PROPORTION  OF  METAL  IN 
THEIR  CURRENCIES. 

IT  is  true  that  the  United  States,  after  having  adopted 
gold  as  their  monetary  standard,  have  more  recently  pro- 
posed to  employ  a  considerable  quantity  of  that  metal, 
and  which  they  have  indeed  coined  ;  but  how  much  of  it 


88  NEW   OUTLET    FOR    GOLD. 

have  they  retained,  and  how  much  do  they  really  require? 
Gold,  which  in  France  is  found  extremely  portable,  be- 
cause there  the  people  had  been  accustomed  to  a  silver 
currency,  appears  somewhat  inconvenient  to  the  inhabi- 
tants of  the  United  States,  in  consequence  of  their  having 
adopted  the  use  of  bank  notes  for  the  money  required  to 
be  carried  about  their  persons  ;  in  that  country  the  bank 
note  supplies  all  the  daily  and  current  wants,  it  being 
issued  for  very  small  sums.  In  those  States,  where  they 
are  the  most  restricted,  bank  notes  are  in  use  for  .as  small 
sums  as  five  dollars  (26  francs  20s.  lOd.)  In  other  States, 
and  particularly  in  New  York,  they  have  dollar  notes  (4s. 
2d.),  and  the  notes  of  one  State,  when  they  are  in  good 
repute,  circulate  freely  in  others.  It  must  also  be  re- 
membered that,  in  the  United  States,  private  individuals 
have  generally  an  account  current  at  a  bank,  through 
which  they  make  all  kinds  of  payments,  even  down  to  the 
expenses  of  their  households,  which  renders  it  unnecessary 
to  retain  at  home  any  considerable  sum,  even  in  bank 
notes.  Under  these  circumstances  we  may  fairly  assume 
that  the  currency  of  the  United  States  would  be  sufficient- 
ly supplied  with  specie,  if  the  circulation  contained  a  mil- 
liard of  francs  (£40,000,000),  independently  of  the  silver 
coins  which  are  to  a  certain  extent  in  use.  I  should  say 
much  less,  but  for  the  exigencies  of  the  federal  govern- 
ment, which,  for  several  years,  has  adopted  the  absolute 
law  of  receiving  nothing  but  specie  in  its  treasuries,  and 
which  thus  compels  foreign  merchants,  as  well  as  the  pur- 
chasers of  the  public  lands,  to  keep  by  them  a  considera- 
ble amount  of  gold  currency. 

As  respects  this  estimate  of  a  milliard  (£40,000,000), 
as  the  amount  of  gold  which  would  suffice  for  the  United 
States,  it  must  be  borne  in  mind  that  for  along  time  this  sum 
has  been  considered  sufficient  for  England,  whose  popula- 
tion is  equal  to  that  of  the  United  States,  but  where  they 


NEW    OUTLET    FOB    GOLD.  89 

"have  no  bank  notes  of  a  lower  denomination,  excepting  in 
Scotland/*  than  124  francs  (£5).  In  our  day,  it  is  not 
likely  that  the  United  Kingdom  will  require,  under  ordi- 
nary circumstances,  much  more  than  a  milliard  and  a 
half  of  gold  currency  (£60,000,000).  Moreover,  where, 
as  in  England,  in  all  payments  below  125  francs  (£5), 
specie  is  required,  it  is  natural  that  gold  should  form  a 
large  part  of  the  currency.  But  there  can  be  very  little 
occasion  for  gold,  on  the  contrary,  where,  as  in  the  United 
States,  every  payment  of  26  francs  (20s.  lOd.).  and  fre- 
quently those  of  5  francs  (4s.  2d.)  can  be  made  in  paper. 
It  is  silver  that  is  required  in  countries  where  bank  notes 
of  so  small  a  denomination  are  in  use.  Besides,  at  this 
very  time,  the  United  States  ought  to  have  been  in  pos- 
session of  a  milliard  (£40,000,000),  or  more,  of  gold  cur- 
rency, if  such  a  sum  had  been  felt  to  be  necessary.  Since 
the  discovery  of  California  their  mints  have  been  in  an  al- 
most unnatural  state  of  activity,  in  comparison  with  past 
times.  In  the  fifty  years,  from  1*793  to  the  end  of  1848, 
the  year  in  which  the  Californian  mines  were  discovered, 
their  gold  coinage  amounted  to  only  81  millions  of  dollars 
(£16,200,000),  or  an  annual  average  of  1,470,000  dollars 
(£294,000).  In  the  seven  years,  from  the  1st  January, 
1850,  to  the  1st  January,  1857,f  their  mints  have  coined 
369  millions  of  dollars,  or  upwards  of  I  .milliard,  900  mil- 
lions of  francs  (£76,000,000).  It  is  at  the  rate  of  53 
millions  of  dollars,  or  274  millions  of  francs  (£10,960,000) 
per  annum,  for  the  average  of  the  seven  years,  and  of  56 
millions  of  dollars,  or  290  millions  of  francs  (£11,600,000), 
for  the  average  of  the  last  six  years.  Since  the  1st  Jan- 
uary, 1857,  this  rate  of  production  will  have  certainly  con- 
tinued. Thus,  to  the  present  time,  the  emission  of  gold 
coins  in  the  United  States,  since  the  discovery  of  the  mines 

*  In  population,  Scotland  is  only  the  tenth  of  the  United  Kingdom. 
+  American  Almanac  for  1858,  p.  215. 


90  NEW    OUTLET    FOR    GOLD. 

of  California,  must  have  readied  nearly  two  milliards  and 
a  half  (£100,000,000)  ;  and  although  that  country  may 
have  exported  a  large  portion  of  its  gold,  it  probably  re- 
tains at  this  moment  all  that  it  requires,  and  therefore  it 
is  not  to  North  America  that  we  must  look  for  an  outlet 
for  the  gold  of  the  new  mines.  It  may  not,  on  this  point, 
be  superfluous  to  add  that,  probably,  that  country  may 
have  kept  a  part  of  the  gold  which  it  had  coined  prior  to 
1850,  and  which  had  attained,  relatively,  increased  pro- 
portions during  the  later  years.  In  1847,  the  gold  coined 
in  the  United  States  amounted  to  more  than  20  millions 
of  dollars,  or  104  millions  of  francs  (£4,160,000). 

I  come  next  to  Austria.  Let  us  suppose  that  she  coins 
gold  to  the  amount  of  half  a  milliard  (£20,000,000)  ;  it 
is  more  than  there  is  reason  to  expect  from  her,  and  for 
many  reasons.  In  the  first  place,  it  is  not  possible  to  see 
how  the  Austrian  Empire  could  suddenly  have  need  of  such 
an  extensive  gold  coinage.  The  country  has  hitherto  had 
a  silver  rather  than  a  gold  currency.  The  pieces  of  silver, 
20  kreutzers,  or  87  centimes  (9d.)?  were  the  money  most 
generally  met  with  there,  before  the  Empire  fell  under  the 
regime  of  paper  money,  which,  as  is  known,  dates  from 
1848,  and  the  greater  part  of  those  pieces,  though  with- 
drawn from  circulation,  are  doubtless  in  the  country.  The 
metallic  currency  of  this  Empire  presented  these  two 
characteristics  ;  it  was  scarce  ;  and  it  consisted  princi- 
pally of  silver  coins  of  a  small  denomination,  because  the 
Austrian  public  has  been  accustomed  to  the  notes  of  the 
Bank  of  Vienna,  which  were  issued  for  very  small  sums, 
even  before  they  had  a  forced  circulation.  Notes  of  10 
florins  or  26  francs  (20s.  10d.),  and  of  5  florins  or  13 
francs  (10s.  5d.)  were  in  abundance.  To  this  day,  we 
have  no  reason  to  believe  that  the  Austrian  government, 
in  its  efforts  to  return  to  specie  payments,  which,  unhap- 
pily, it  has  not  yet  accomplished  (Spring,  1858),  contem- 


NEW    OUTLET   FOR    GOLD.  91 

plates  any  change  of  system  by  which  notes  of  a  small 
denomination  will  be  abolished.  Now,  when  a  people 
have  bank  notes  of  13  francs  (10s.  5d.),  what  occasion 
can  they  have  for  gold  coins  ?  Besides,  there  is  another 
decisive  fact  :  in  consequence  of  the  new  monetary  sys- 
tem, recently  adopted  by  Germany,  Austria,  in  common 
with  the  rest  of  the  Germanic  Confederation,  has  placed 
herself  in  circumstances  which  will  henceforth  make  gold 
play  a  secondary  part  in  her  circulation,  even  if,  contrary 
to  all  probability,  she  were  to  renounce  her  bank  notes  of 
26  francs  (20s.  10d.),  and  13  francs  (10s.  5d.)  In  this 
system  of  currency,  it  is  silver  and  not  gold  which  serves 
for  the  pivot,  and  is  the  standard.  The  monetary  unit  is 
in  silver ;  and  although  it  is  true  that,  consistent  with 
this  fact,  it  might  be  possible,  by  means  of  certain 
contrivances,  to  secure  for  gold  a  considerable  circulation, 
we  do  not  see  that  any  such  contrivances  have  been  adopted 
by  the  Germanic  Confederation  in  general,  or  by  Austria 
in  particular,  or  that  they  have  great  chance  of  being 
adopted  ;  the  tendencies  seem  rather  in  an  opposite  di- 
rection. 

I  am,  therefore,  going  beyond  the  bounds  of  proba- 
bility in  admitting  that  the  monetary  system  of  Austria 
will,  in  the  course  of  a  few  years,  offer  to  the  new  pro- 
duction of  gold  an  outlet  of  half  a  milliard  of  francs,  or 
145,000  kilogrammes  of  gold  (£20,000,000)  ;  but  I  de- 
sire to  make  the  most  liberal  concessions  to  those  who 
insist  that  it  will  be  easy  to  find  a  market  for  the  gold  of 
the  new  mines. 

As  to  Turkey,  I  find  it  impossible,  however  well  dis- 
posed, to  make  her  play  a  serious  part  in  my  calculations. 
Turkey  has  neither  commerce  nor  credit ;  the  gold  bullion 
which  she  can  attract  or  keep  is  insignificant  in  compari- 
son with  the  quantity  of  this  metal  produced,  and  we  can- 


92  NEW   OUTLET    FOR    GOLD. 

not  assign  the  slightest  weight  to  her  in  the  present  argu- 
ment. 

And,  since  we  are  taking  into  account  those  States 
which  may  absorb  large  quantities  of  gold,  why  not  also 
include  in  our  calculation  those  which  may  be  induced  to 
demonetise  this  metal  ?  This  may  not  be  a  chimerical 
precaution,  for  the  Dutch,  who  possess  in  the  highest 
degree  a  practical  sense,  have  almost  taken  this  great 
step  ;  in  Belgium,  a  country  where  business  is  understood, 
the  same  policy  has  been  adopted.*  The  East  India 
Company  has  pursued  the  same  course  throughout  its  vast 
dominions.  Spain  has  so  far  made  a  beginning,  that  she 
has  withdrawn  the  attribute  of  money  from  foreign  gold 
coins  ;  it  is  certainly  possible  that  she  may  go  further. 

We  must  not  lose  sight  of  the  fact  that  one  of  the 
reasons  why  the  precious  metals  have,  simultaneously,  or 
separately,  been  invested  with  the  functions  of  money, 
consists  in  the  fact  that  they  are  generally  more  fixed  in 
value  than  o.ther  commodities.  The  relative  fixedness  of 
value  is  one  of  the  essential  conditions  for  qualifying  an 
object  to  serve  as  money,  for  if  this  fixedness  did  not  ex- 
ist, how  could  the  money  of  which  it  was  made  serve  as 
the  measure  of  values  ?  From  the  moment  that  either  of 
the  two  precious  metals  loses  this  attribute,  or  that  it 
remains  in  suspense  for  a  certain  length  of  time,  it  is  nei- 
ther more  nor  less  than  the  loss  of  the  condition  which 
qualifies  it  for  the  purposes  of  money.  This  is  so  well 
understood  by  persons  versed  in  these  matters,  that,  in 
England,  where  the  fall  in  the  value  of  gold  is  imminent, 
and  even  already  in  course  of  realisation,  able  men  have 
advised  the  abandonment  of  the  gold  standard,  and  the 
adoption  of  a  standard  of  silver.  According  to  these 

*  In  Holland  and  Belgium,  a  gold  currency  continues  to  circulate,  but 
purely  and  simply  as  merchandise,  the  daily  value  of  which  is  regulated  by 
commerce,  and,  consequently,  it  is  very  little  used. 


NEW    OUTLET    FOE    GOLD.  93 

writers,  gold  ought  henceforth  to  be  demonetised  in  Eng- 
land. I  shall  have,  by  and  bye,  to  cite  a  remarkable 
publication,  where  this  opinion  is  sustained  with  much 
force.  With  much  more  reason,  for  a  country  like  Spain, 
where  the  two  metals,  gold  and  silver,  circulate  simulta- 
neously, without  either  being  qualified  positively  as  a 
standard  in  relation  to  the  other,  may  such  a  measure  be 
anticipated,  or  at  least  ranked  among  the  number  of  pos- 
sibilities ? 

I  think  I  may  pass  over  in  silence  the  outlets  afforded 
by  Asia  and  Africa.  Everybody  knows  that  in  the  Bar- 
bary  Regencies,  in  the  Levant,  in  China,  and  in  the  East 
generally,  silver  is  the  metal  preferred.  Silver,  and  not 
gold,  is  almost  exclusively  the  metal  exported  from  Europe 
to  those  countries.  It  is  not  that  in  some  of  the  regions 
of  distant  Asia,  in  India,  for  example,  gold  is  not  appre- 
ciated and  sought  after  ;  but  the  local  mines,  and  those  of 
the  islands  of  Sunda,  particularly  of  the  island  of  Borneo, 
which  are  important,  are  sufficient  to  supply  their  wants. 

In  fine,  according  to  the  preceding  statement,  if  we 
seek  to  estimate  the  quantity  of  gold  which  may  be  in  re- 
quest for  the  next  ten  years  to  complete,  or  re-establish 
on  a  sound  basis,  the  currency  of  States  which  notoriously 
require  a  metallic  currency,  or  which,  subjected  to  the  re- 
gime of  paper  money,  are  prepared  to  make  great  sacrifi- 
ces to  escape  from  it,  we  arrive  at  no  very  considerable 
result.  Austria,  alone,  seems  likely  to  receive  a  certain 
portion  of  the  precious  metal  ;  and  it  is  on  a  very  gener- 
ous hypothesis  that  I  have  carried  to  145,000  kilogrammes 
of  gold  (£20,000,000),  the  amount  which  may  be  absorb- 
ed, by  the  process  indicated  in  the  previous  chapter,  in 
that  Empire.  However,  to  remove  all  pretext  for  opposi- 
tion, I  will  put  at  more  than  double,  at  300,000  kilo- 
grammes (£41,380,000),  the  total  mass  of  gold  which  may 
during  the  next  decennial  period  find  a  market  in  the  Em- 


NEW    OUTLET    FOR    GOLD. 


pire  of  Austria,  and  in  the  other  States  where  a  similar 
want  prevails. 

Here,  then,  is  the  first  outlet  of  an  extraordinary  kind, 
which  offers  itself  to  the  gold  of  California  and  Australia, 
as  well  as  to  that  which  we  have  reason  to  expect  will  be 
extracted  from  the  mines  of  Northern  Kussia. 


CHAPTER  II. 

OF  THE  INCREASE  OF  GOLD  MONEY  WHICH  MAY  AEISE  FEOM  THE  DE- 
VELOPMENT OF  BUSINESS,  AND  THE  INCREASE  OF  POPULATION.— OF 
WEAK  AND  TEAR.— OF  HOARDING.— OF  SHIPWRECKS. 

I  COME  to  the  second  of  the  outlets  which  have  been 
indicated,  and  which  I  have  denominated  above  ;  it  re- 
lates to  countries  where  the  coinage  is  in  a  different  state 
from  that  considered  in  the  preceding  chapter.  According 
to  those  who  maintain  that  there  will  be  no  excess  of  sup- 
ply beyond  the  demand  for  this  metal,  and  that  conse- 
quently a  fall  in  its  value  is  not  probable,  it  is  not  only  in 
those  countries  where  at  present  there  is  little  or  no  specie 
in  circulation,  and  where  there  is  a  desire  to  escape  from 
the  regime  of  paper  money,  that  a  large  outlet  will  be  af- 
forded to  the  new  gold  for  monetary  purposes.  All  civil- 
ised countries,  those  at  least  where  gold  is  a  legal  tender, 
are  to  acquire  a  new  supply,  to  be  coined  into  money,  for 
two  reasons  at  least  : — in  the  first  place,  the  progress  of 
commerce,  and  the  constantly  increasing  number  of  trans- 
actions ;  and  next  the  growth  of  population.  Besides  which, 
the  coinage  must  be  maintained,  that  is,  the  loss  from 
wear  and  tear  must  be  replaced. 

On  the  first  point,  the  multiplication  of  money  which 
must  take  place  in  consequence  of  the  extension  of  com- 
merce, it  may  be  well,  in  order  to  form  a  rational  opinion 


NEW    OUTLET    FOR    GOLD.  95 

on  the  subject,  to  take  into  account  the  contrivances  by 
which  great  civilised  communities  modify  the  machinery 
of  their  exchanges,  in  proportion  as  commerce  extends  its 
operations  and  enlarges  its  sphere.  Now,  it  may  be  shown 
that  the  progress  of  commercial  institutions,  such  as 
credit  establishments,  for  instance,  with  the  intelligent 
employment  of  the  substitutes  which  they  put  forth,  the 
written  contracts  and  instruments  which  they  enable  the 
public  to  keep  in  active  use,  allow  of  a  very  great  increase 
of  commercial  transactions  with  only  a  small  augmenta- 
tion of  the  metallic  basis  to  pay  the.  balance  of  exchanges. 
The  employment  of  bank  notes,  the  transfer  of  sums  from 
party  to  party  in  accounts  current,  letters  of  credit  or 
drafts  to  order,  of  cheques  such  as  are  in  use  in  England, 
the  creation  of  establishments  similar  to  the  Clearing 
House  of  London,  the  judicious  adoption  of  every  possi- 
ble contrivance  for  facilitating  the  transactions  between 
house  and  house,  city  and  city,  state  and  state — all  this 
tends  to  put  limits  to  the  extension  of  those  metallic  wheels 
which  give  motion  to  the  machine  by  which  commercial 
exchanges  adjust  themselves.  This  machine  has  under- 
gone and  is  undergoing  continually  great  improvements, 
almost  as  great  as  those  of  the  steam  engine. 

Fifty  years  ago  a  steam  engine  of  forty  horse-power 
would  have  cost  100,000  francs  (£4,000)  ;  in  our  day,  in 
France,  Farcot,  Cave,  Gail,  and  a  dozen  others,  will  pro- 
duce one  at  25,000  (£1,000).  It  is  the  same  in  other 
countries.  This  arises  from  the  great  improvements  made 
in  the  steam  engine  during  the  half  century  ;  it  is  lighter 
than  heretofore,  contains  less  cast  or  wrought  iron,  and 
yet  it  is  as  strong  and  safe  as  before,  if  not  more  so.  It 
is  the  same  with  the  instrument  of  exchanges.  Formerly 
it  called  into  requisition  a  large  quantity  of  metal,  gold 
or  silver.  Now,  for  the  same  extent  of  business  a  much 
smaller  quantity  suffices.  How  is  this?  Because  by  a 


96  NEW    OUTLET    FOR    GOLD. 

number  of  ingenious  contrivances,  like  those  in  existence 
in  England,  and  which  France  and  other  countries  are  not 
slow  in  imitating,  the  greater  part  of  the  operations  of 
commerce  are  conducted  without  the  intervention  of  a  sin- 
gle crown-piece,  or,  at  least,  without  calling  into  requisi- 
tion any  metallic  money  excepting  as  a  matter  of  account. 
Letters  of  credit,  bills,  cheques,  and  other  instruments  of 
the  same  kind,  are  multiplied  in  proportion  to  the  exten- 
sion of  commerce,  but  the  specie  required  for  these  trans- 
actions experiences  hardly  any  increase. 

It  is  well  to  give  prominence  to  the  fact  of  the  nearly 
stationary  character  of  the  metallic  currency  in  countries 
where  the  commercial  machinery  is  well  organised.  Bank 
notes  are,  it  is  known,  another  species  of  coin,  not  metallic 
it  is  true,  but  serving  for  a  direct  substitute  to  metallic 
money,  which  alone,  however,  constitutes  money  properly 
so  called.  It  may  be  considered  that  they  should  expand 
or  contract  in  the  circulation,  nearly  the  same  as  specie, 
if  it  were  alone  in  use,  according  to  the  necessities  of 
commerce,  inasmuch  as  the  mass  of  these  notes  minister 
to  the  operations*  of  commerce.  This  is  particularly  the 
case  where,  as  with  the  notes  of  the  Bank  of  England, 
they  are  invested  with  the  attribute  of  a  legal  tender. 
We  know  that  in  England,  by  virtue  of  this  privilege,  the 
debtor  can  pay  his  creditor  in  these  notes,  without  the 
latter  having  the  power  of  refusal,  with  this  reserve,  how- 
ever, that  at  the  same  time  the  Bank  of  England  shall 
redeem  them  on  demand  in  specie.  Under  these  condi- 
tions nearly  all  the  reasons,  drawn  from  the  necessities  of 
commerce,  which  call  for  an  augmentation  of  the  mass  of 
gold  coins  in  circulation,  are  also  applicable  to  the  bank 

*  Independently  of  the  operations  of  commerce,  properly  so  called,  the 
bank  note  is  of  use  in  many  payments  which  may  be  called  civil,  as,  for 
instance,  the  dividends  of  the  public  debt,  and  the  salaries  of  public  func- 
tionaries. 


NEW    OUTLET    FOE    GOLD.  97 

note,  and  we  are  justified  in  arguing  from  the  sovereign  to 
the  bank  note,  and  reciprocally.  Now,  we  know,  in  the 
most  exact  manner,  the  variations  which  in  England  the 
quantity  of  paper  money  necessary  for  her  transactions 
undergoes  ;  the  official  returns  show  periodically  the 
amount  of  bank  notes  in  circulation.  A  glance  at  these 
returns  is  sufficient  to  show  that  the  sum  total  is  almost 
stationary,  in  spite  of  the  astonishing  rapidity  with  which 
her  commerce  has  increased.  In  ten  years,  from  1846  to 
1856,  for  Great  Britain  alone,  which  is  the  great  seat  of 
the  commerce  of  the  United  Kingdom,  the  circulation  of 
bank  notes  has  only  increased  £75,904  upon  £30,925,- 
123  ;*  or  an  annual  average  of  the  insignificant  sum  of 
£7,590  only,  or  in  the  proportion  of  1  to  4,000  ;  a  pro- 
gression, so  to  speak,  imperceptible  alongside  of  that  of 
its  population,  and  especially  of  that  of  its  commerce,  as 
it  is  disclosed  to  us  among  other  signs  by  the  tables  of 
importations  and  exportations. 

If  we  confine  ourselves  to  England  and  Wales,  which 
comprise  the  most  populous,  the  most  industrial,  and  the 
richest  portion  of  the  United  Kingdom,  it  will  be  found 
that  from  1846  to  1856  the  average  circulation  instead  of 


*  In  1846,  the  average  circulation  of  bank  notes  in  Great  Britain 
£30,925,123;  namely:— 

Notes  of  the  Bank  of  England  £20,786,500 

Ditto  other  Banks  of  England  and  Wales  7,645,855 

Ditto  of  Scotland  7. 2,492,768 


Total  £30,925,123 


In  1856,  this  circulation  was  £31,001,027,  namely: — 

Notes  of  the  Bank  of  England  £20,083,000 

Ditto  other  Banks  of  England  and  Wales  6,756,872 

Ditto  of  Scotland  4,161,155 


Total  £31,001,027 


98  NEW    OUTLET    FOB   GOLD. 

increasing  had  diminished,  and  that  even  for  the  very  con- 
siderable sum  of  £1,592,500. 

Here  is  another  fact  illustrating  to  what  an  extent  the 
improvement  in  commercial  institutions  permits  an  in- 
crease in  transactions,  without  requiring  an  addition  to 
the  metallic  currency,  or  even  to  the  credit  currency,  that 
is  to  say,  to  bank  notes.  The  Clearing  House  of  London 
is,  as  its  name  indicates,  an  establishment  to  which  every 
day  the  accounts  of  individuals,  traders,  and  others  come 
for  liquidation,  through  the  intermediation  of  their  bank- 
ers. In  1839,  this  establishment  had  already  attained 
such  efficiency  that  for  the  annual  liquidation  of  950  mil- 
lions sterling,  or  three  millions  daily,  it  only  required,  on 
an  average  each  day,  £200,000  in  sovereigns,  or  rather  in 
bank  notes.  At  present,  with  a  mass  of  transactions 
amounting  to  1,500  millions,  or  2,000  millions  sterling 
annually,  instead  of  a  proportionate  addition  to  the 
£200,000  required  for  the  daily  balance  being  necessary, 
not  a  shilling  is  wanted  :  the  Clearing  House  now  dis- 
penses completely  with  the  use  of  bank  notes.  All  is 
settled  by  the  transfer  of  sums  from  one  account  to 
another  in  the  books  of  the  Bank  of  England. 

This  is  the  place  to  point  out  the  increase  that  has 
taken  place  in  the  employment  of  bills  of  exchange,  and 
to  compare  it  with  the  stationary  state  of  the  amount  of 
bank  notes  in  circulation.  An  estimate,  somewhat  con- 
jectural, but  still  plausible,  made  by  an  English  banker,* 
Mr.  Leathani,  taking  for  his  point  of  departure  the  pro- 
duce of  the  stamps  on  commercial  bills,  makes  the  mass 
of  bills  of  exchange  drawn  in  the  United  Kingdom  in 
1839  amount  to  528  millions  sterling.  The  augmentation 
was  continual  ;  from  1832  it  was  at  the  rate  of  24  mil- 

*  The  calculations  of  Mr.  Leatham  have  received  the  explicit  approval 
of  Mr.  Tooke,  in  his  publication, — An  Inquiry  into  the  Currency  Principle, 
p.  26. 


NEW    OUTLET    FOR    GOLD.  99 

lions  per  annum.  A  more  interesting  fact  probably  is  the 
amount  of  bills  of  exchange  at  one  time  in  circulation, 
which  it  would  seem,  from  the  same  calculations,  amount- 
ed at  a  given  date  in  1839  to  132  millions  sterling ; 
according  to  this  the  average  annual  increase,*  since  1832, 
must  have  been  more  than  18  millions  sterling. 

The  statistical  accounts  of  Mr.  William  Newmarch,  the 
able  fellow-labourer  of  Mr.  Thomas  Tooke  upon  the  two 
last  volumes  of  the  History  of  Prices,  which  appeared  in 
1857,  give  the  total  number  of  bills  of  exchange  in  circula- 
tion at  a  given  moment,  in  the  United  Kingdom,  in  1856,  at 
about  180  millions  sterling;  or  probably,  as  he  adds,  near- 
ly 200  millions  :*  200  millions  of  bills  of  exchange  against 
less  than  40  millions  of  bank  notes,  what  more  need  be 
said  to  prove  that  in  a  country  where  the  commercial  in- 
stitutions are  in  an  advanced  state,  the  currency  of  every 
kind,  whether  metallic  or  paper,  fills  in  respect  of  quantity 
but  a  secondary  part  ?f 

It  is  not  denied  that  everywhere,  in  proportion  as 
population  increases,  more  money  is  required  for  transac- 
tions, other  than  those  of  commerce  strictly  so  called,  as 
for  example  those  which  take  place  in  civil  life,  for  retail 
purchases,  for  wages,  and  a  thousand  minor  payments. 
This  influence  of  the  number  of  the  population  upon  the 
amount  of  the  metallic  currency,  and  particularly  of  gold, 
may  be  sensibly  felt,  especially  in  countries  where,  as  in 
England,  there  are  no  bank  notes  for  less  than  £5,  or  even 
of  100  francs  (£4),  as  was  the  case  in  Erance  until  the 
law  which  was  voted  at  the  end  of  the  session  of  1857  ; 
but  population  augments  everywhere  slowly  compared  with 

*  History  of  Prices,  Vol.  VI.,  p.  587. 

f  I  refer  to  the  Principles  of  Political  Economy  of  Mr.  J.  S.  Mill  for  an 
explanation  concerning  the  diverse  scope  of  the  part  which  the  different 
mechanisms  of  credit  play  with  the  same  nominal  power ;  Book  III.,  Chap. 
IV. :  and  to  the  Inquiry  into  the  Currency  Principle,  by  the  same  author. 


100  NEW  OUTLET  FOR  GOLD. 

the  increase  that  has  taken  place  in  the  production  of 
gold.  In  Europe  it  varies  in  the  different  States  from  •}• 
per  cent,  per  annum  to  1-|-  per  cent.*  In  the  United 
States,  hy  a  sole  exception,  it  is  3  per  cent,  if  not  more. 
Let  us  admit  the  average  increase  to  be  1J  per  cent., 
which,  for  the  whole,  is  an  exaggeration.  Now,  what  is 
the  mass  of  gold  currency  to  take  for  our  starting  point  ? 
It  would  be  very  difficult  to  estimate  at  more  than  6  mil- 
liards (£240,000,000)  the  sum  required  for  the  circula- 
tion, independently  of  silver  money,  of  all  the  nations  of 
Christendom.f  Now,  1  \  per  cent. on  this  sum  amounts  to  75 
million  francs,  or  22,000  kilogrammes  of  gold  (£3,000,000). 
But  here  it  will  be  said  that  we  ought  not  to  look 
merely  at  the  growth  of  population,  that  the  increase  of 

*  In  France,  the  increase  of  the  population,  as  measured  by  the  excess 
of  births  over  the  deaths,  has  only  been  on  an  average,  during  the  triennial 
period  from  1st  January,  1851,  to  31st  December,  1853,  at  the  rate  of 
152,738.  To  have  been  \  per  cent.,  it  ought  to  have  exceeded  175,000. 
The  three  following  years  must  be  considered  exceptional,  for  under  various 
adverse  influences  they  exhibit  a  decreasing  population. 

f  The  amount  of  money,  whether  gold  or  silver,  which  circulated  in 
Europe  thirty  years  ago,  was  estimated  at  less  than  9  milliards  (£360,000,- 
000.)  Baron  Humboldt  quoted  as  probable,  in  1827,  the  sum  of  8,600  mil- 
lions (£344,000,000).— Essay  on  New  Spain,  Vol.  III.,  p.  469.)  The 
amount  must  have  since  increased ;  but  the  employment  of  contrivances  for 
dispensing  with  the  use  of  money,  through  the  instrumentality  of  institu- 
tions of  credit,  or  for  balancing  commercial  transactions,  has  increased  in  a 
still  greater  ratio,  and  must  have  largely  dispensed  with  an  increase  in  the 
amount  of  metallic  money  in  proportion  to  the  growth  of  commerce.  If  it 
is  borne  in  mind  that  America  has  yielded  almost  constantly,  until  1848, 
much  more  silver  than  gold,  nearly  in  the  proportion  of  3  francs  of  the 
former  against  1  franc  of  the  latter,  the  assertion  will  appear  probable  that, 
taking  into  account  the  silver  money  possessed  by  Europe,  and  the  Chris- 
tian world  generally,  and  the  present  improved  mechanism  for  facilitating 
exchanges,  the  whole  of  Christendom  would  not  have  had  occasion  for  a 
circulation  of  more  than  6  milliards  (£240,000,000)  of  gold  currency,  so  long 
as  gold  should  not  have  suffered  any  depreciation  in  value ;  it  is  making  a. 
great  concession  to  admit  so  large  a  sum.  I  put  the  word  circulation  in 
italics,  because  I  wish  it  to  be  understood  that  I  do  not  mean  to  include 
that  which  has  been  concealed  or  hoarded  from  any  cause  whatever. 


NEW    OUTLET    FOR    GOLD.  101 

general  wealth,  as  well  as  the  diffusion  of  comfort  among 
the  working-class,  must  also  be  taken  into  account. 
Again,  it  will  be  shown  that  the  retail  transactions,  which 
can  only  be  carried  on  with  a  metallic  currency,  are  much 
more  extended  when  people  are  in  prosperous  circumstances 
than  when  they  are  suffering  from  privations.  It  is  true; 
but  is  it  a  gold  currency  that  is  wanted  for  this  purpose  ? 
It  is  rather,  as  it  appears  to  me,  silver  or  copper  money 
that  is  required  for  the  daily  purchases  of  the  greater  num- 
ber of  households.  Gold  is  never  coined  into  pieces  of  less 
than  5  francs  (4s.  2d.),  and  even  the  success  of  these  coins 
of  five  francs ,  which  have  lately  issued  from  the  French 
Mint,  remains  very  doubtful,  notwithstanding  the  pains 
that  have  been  taken,  by  giving  them  the  largest  surface 
possible,  to  prevent  their  slipping  between  the  fingers  : 
and  still  the  piece  of  five  francs  is  a  large  sum  for  trans- 
actions of  this  kind. 

It  may  here  be  remarked  that  the  introduction  of  the 
bank  note  of  fifty  francs  (£2)  into  the  circulation  of 
France,  which  has  just  been  authorised  by  law,  will  be 
calculated  considerably  to  diminish  the  proportion  of  gold 
employed  in  the  currency.  This  restrictive  effort  will,  in 
France  at  least,  be  a  counterpoise  to  the  expansive  force 
which  may  be  imparted  to  the  circulation  of  gold.  It  may 
be  said,  it  is  true,  that  the  Bank  of  France,  which  has  not 
shown  an  excess  of  zeal  in  giving  to  the  note  of  100  francs 
(£4)  all  the  circulation  to  which  this  representative  sign 
might  pretend,  is  far  more  likely  to  delay  indefinitely  the 
issuing  of  the  note  of  50  francs  (£2).  Nevertheless,  the 
Bank's  aversion  to 'novelties  has  its  limits,  and  its  ears  are 
not  shut  to  the  voice  of  reason.  In  the  same  way  as  lat- 
terly it  has  consented  to  distribute  the  100  franc  note 
with  a  less  niggardly  hand,  it  will  yield  to  the  demand  of 
the  public,  if  a  somewhat  strong  opinion  be  pronounced  in 
favour  of  the  note  of  50  francs. 


102  NEW  OUTLET  FOR  GOLD. 

By  the  entire  of  these  considerations,  I  shonld  perhaps 
be  warranted  if  I  made  no  addition,  on  account  of  the  ex- 
tension of  business,  to  the  22,000  kilogrammes  of  gold 
(£3,000,000),  which  have  been  indicated  above  as  suffi- 
cient to  supply  the  wants  of  an  increased  population, — an 
addition  which  has  been  amply  sufficient.  However,  to 
place  my  calculations  beyond  all  possible  objection,  I  will 
double  the  sum  of  22,000  kilogrammes,  which  will  raise 
to  44,000  (£6,000,000),  the  extension  which  will  annual- 
ly be  occasioned  in  the  gold  currency,  as  well  by  the  aug- 
mentation of  business,  as  by  the  growth  of  population.  I 
cannot,  however,  withhold  the  remark  that  I  think  I  have 
been  extremely  liberal :  44,000  kilogrammes  is  more  than 
double  the  mass  of  gold  which  Europe  received  from  1800 
to  1825,  for  every  kind  of  use. 

Let  us  now  inquire  into  the  consumption  of  gold  by 
the  abrasion  of  money  in  passing  from  hand  to  hand.  It 
amounts  in  a  great  State  to  a  very  appreciable  quantity 
of  metal  every  year.  On  this  subject  some  facts  of  a 
varied  character  have  been  furnished  by  observation  and 
experiment,  the  most  remarkable  being  those  which  have 
been  made  at  different  times  in  England,  but  especially  in 
1798,  by  a  celebrated  chemist,  Hatchett,  and  a  distinguish- 
ed physician,  Cavendish  ;  and,  more  recently,  in  France, 
by  Messrs.  Dumas  and  De  Colmont,  in  the  name  of  the 
Commission  on  Coins,  of  which  Th6nard  was  president ; 
and  quite  lately  in  Holland,  on  the  occasion  of  the  change 
made  in  the  currency  of  that  country.  It  has  thus  been 
proved  that,  taking  coins  of  equal  dimensions,  those  pie'ces 
which  contain  a  slight  alloy  of  copper,  and  especially  of 
silver,  suffer  much  less  from  usage  than  those  made  en- 
tirely of  silver.  It  has  also  been  found  that,  in  proportion 
as  we  descend  to  coins  of  a  smaller  denomination,  the  wear 
increases,  even  rapidly,  perhaps  because  they  pass  more 
frequently  than  others  from  hand  to  hand,  or  because  they 


NEW  OUTLET  FOR  GOLD.  103 

present  a  larger  surface  in  proportion  to  their  weight. 
There  is  reason  to  believe  that,  in  adopting  the  proportion 
of  2  to  1000,  or  of  1  to  500,  we  shall  greatly  exaggerate 
the  annual  loss  by  the  wear  of  a  gold  currency.  At  this 
rate,  upon  the  six  milliards  of  francs  (£240,000,000), 
which  would  more  than  suffice  to  saturate  with  gold  the 
whole  circulation  of  Europe,  and  the  other  States  of  Chris- 
tendom, there  would  be  a  yearly  loss  of  12  millions  of 
francs,  or,  in  round  numbers,  of  3,500  kilogrammes*  of 
metal  (£480,000). 

*  The  facts  which  we  possess,  as  to  the  wear  of  a  metallic  coinage,  are 
much  less  precise  respecting  gold  than  silver,  and  even  as  regards  the  latter 
they  do  not  always  agree  very  well.  With  respect  to  silver,  it  has  been 
proved  that  the  French  five-franc  piece,  the  weight  of  which  is  25  grammes, 
loses  only  four  milligrammes  per  annum;  that  is  16  parts  in  100,000,  or  1  in 
6,250.  In  England,  according  to  the  experiments  of  Cavendish  and  Hatch- 
ett,  quoted  by  Mr.  Jacob,  the  loss  was,  upon  the  five-shilling  piece,  18  in 
the  100,000,  or  1  in  5,555  ;  and  on  the  shilling,  which  had  a  much  more, 
rapid  circulation,  1  in  219.  Returns  on  a  much  larger  scale  have  been  fur- 
nished from  Holland,  obtained  a  few  years  ago  during  the  general  recoinage 
of  her  silver  money,  and  they  have  been  justified  in  a  work  which  was,  by 
the  order  of  the  government,  published  on  the  occasion  of  that  vast  opera- 
tion, by  M.  Vrolic,  the  president  of  the  Commission  on  the  Coinage  of  the 
Low  Countries,  and  subsequently  minister  of  finance.  It  appears  that  the 
wear  of  silver  coins,  of  a  small  denomination,  is  much  less  in  Holland  than 
has  been  estimated  by  Mr.  Jacob  for  England.  Mr.  Jacob  concludes,  from 
the  experiments  made  at  the  Mint  of  London,  in  1826,  that  gold  coins  lose 
annually  1  part  in  800.  The  experiments  of  1807,  according  to  the  quota- 
tion given  by  the  same  author,  would  indicate  a  loss  of  1  in  1,050  on  guin- 
eas, and  of  1  in  160  on  half-guineas.  If,  then,  we  bear  in  mind  that  the 
guineas,  or  more  properly  speaking  the  sovereigns,  form  the  principal  part 
of  the  gold  coin's  in  circulation  in  England,  the  average  annual  wear  will  be 
about  1  in  950.  In  France,  where  the  prevailing  gold  coin  seems  destined 
always  to  be  the  20-franc  piece  (16s.  8d.),  which  does  not  differ  considerably 
in  volume  or  circumference  from  the  English  sovereign,  but  where  the  silver 
contained  in  the  ingots,  which  would  add  to  the  hardness  of  the  money,  is 
more  carefully  extracted  before  it  is  coined  than  in  England,  the  proportion 
of  loss  is  a  little  greater ;  but  there  is  good  ground  for  concluding  that  it  is 
less  than  2  in  1,000,  or  200  in  100,000.  When  we  compare  20-franc  pieces 
of  a  rather  old  date,  but  which  have  not  been  "  sweated,"  with  five-franc 
pieces  of  the  same  date,  they  appear  less  worn.  Now,  the  latter,  as  has 
been  shown,  lose  only  1  in  6,250. 


104  NEW  OUTLET  FOE  GOLD. 

Taking  into  account  the  whole  of  the  employments  to 
the  examination  of  which  this  chapter  has  been  devoted, 
and  calculating  them  with  a  liberality  which  must  be  ad- 
mitted to  be  excessive ,  we  arrive  at  an  annual  consump- 
tion of  47,500  kilogrammes,  (£6,650,000)  of  gold  ;  for  ten 
years  this  would  be  475,000  kilogrammes  (£66,500,000.) 

There  is  yet  another  possible  means  for  the  consump- 
tion of  gold  to  be  noticed  ;  I  allude  to  the  practice  of 
hoarding.  To  hoard,  that  is,  to  hide  money  in  secret 
places,  is  a  habit  belonging  to  an  uncivilised  state  of  soci- 
ety, where  riches  take  refuge  under  ground  to  escape  spo- 
liation, or  in  which  loans  on  interest  are  hardly  known, 
either  from  their  being  condemned  by  prejudice,  or  from 
the  fear  that  money  once  parted  with,  would  be  given  up 
to  rash  adventures.  It  is  a  habit  which  for  a  long  time 
not  merely  withdrew  large  sums  from  circulation,  but 
actually  occasioned  their  loss  ;  because,  in  the  midst  of 
revolutions,,  invasions,  and  other  public  calamities,  their 
place  of  concealment  was  forgotten  ;  the  secret  was  lost 
by  the  death  or  exile  of  its  possessor.  But  in  the  Europe 
of  our  day,  the  quantity  of  the  precious  metals  which 
issue  from  their  hiding-places  is,  in  all  likelihood,  greater 
than  that  which  seeks  refuge  there.  The  practice,  there- 
fore, of  hoarding  can  scarcely  be  any  longer  cited  as  occa- 
sioning a  void  in  the  circulation,  which  the  mines  will 
have  to  fill  up.  However,  to  avoid  absolutely  the  charge 
of  not  having  taken  sufficient  account  of  all  the  possible 
outlets  for  the  metal  extracted  from  the  new  gold  mines,  I 
will  suppose  that  50  millions  (£2,000,000)  are  abstracted 
from  the  circulation  by  this  process  ;  but  then  it  will  not 
be  taken  amiss  if  I  include  in  this  the  quantity  of  gold 
which  may  be  lost  by  a  variety  of  accidents,  and  particu- 
larly through  shipwrecks. 

There  is  also  a  particular  outlet,  of  a  transient  charac- 
ter, for  gold  money  in  certain  States,  such  as  France  ;  I 
mean  that  portion  of  the  circulation  which  is  carried  on 


NEW  OUTLET  FOR  GOLD.  105 

the  person.  Until  recently,  when  silver  money  circulated 
almost  exclusively  in  France,  people  used  but  very  small 
sums  for  pocket  money  ;  it  was  really  burdensome  to  find 
25  or  30  francs  in  one's  pocket.  But  since  gold  has  taken 
the  place  of  silver,  a  person  who  unwillingly  found  on 
himself  four  or  five  5-franc  pieces,  carries  in  his  purse  at 
least  four  or  five  pieces  of  20  francs,  or  an  equal  sum  in 
smaller  ceins.  There  is  no  doubt  that,  for  the  mass  of 
society  in  France,  the  quantity  of  gold  thus  carried  about 
the  person  amounts  to  a  very  considerable  sum.  Never- 
theless, it  would  be  probably  sufficient  to  assume  that 
there  are  a  million  of  persons  who,  on  an  average,  thus 
permanently  charge  themselves  with  100  francs  each.  Let 
us,  however,  say  double  the  amount,  which  will  give  us 
200  millions  of  francs  (£8,000,000).  But  France  is 
almost  the  only  country  where  this  condition  of  things 
applies,  for  it  could  only  occur  in  a  State  where,  before 
the  discovery  of  the  new  mines,  silver  was  the  current 
money,  and  where,  owing  to  legislative  provisions,  gold 
could  be  substituted  for  a  silver  currency, — and  such 
countries  are  very  few  in  number.  There  are  many  more 
communities  where,  in  the  same  period,  gold  has  been  re  - 
duced  to  a  subsidiary  rank,  or  even  banished  from  the 
circulation  altogether.  Let  us,  however,  double  the  above 
sum  of  200  millions  (£8,000,000),  in  order  to  meet  the 
case  of  similar  phenomena  which  may  have  occurred  else- 
where, and  we  shall  then  have  400  millions  of  gold 
(£16,000,000).  But  it  must  be  remarked  that  the  fact 
in  question  does  not  remain  to  be  accomplished,  that  the 
operation  has  already  been  carried  out  wherever  it  is  likely 
to  be  effected  ;  that  it  is  not,  therefore,  an  employment 
offered  to  gold  for  the  future  ;  that  it  is  only  an  outlet 
which  has  absorbed  a  fraction  of  the  large  quantity  of 
gold  which,  in  addition  to  the  old  *  production,  has  been 
already  yielded  by  the  new  mines. 


106  NEW  OUTLET  FOR  GOLD. 


CHAPTER  III. 

ON   THE  EMPLOYMENT  WHICH  HABITS    OF  LUXUEY  MAY  OFFEE    TO 
THE   GOLD  OF  THE  NEW  MINES. 

WHAT  are  the  outlets  which  may  be  created  by  the  con- 
stantly increasing  developments  of  luxury  ?  On  this 
subject  we  must  avoid  falling  into  a  delusion  :  the  age  is 
less  pompous  than  it  is  supposed  to  be,  or  rather  it  does 
not  exhibit  its  pomp  by  a  display  of  gold  ornaments.  It 
loves  gilding,  and  judging  from  what  is  seen  in  Paris,  this, 
species  of  display  is  extending  in  rooms,  on  furniture, 
wainscots,  and  ceilings  ;  but,  as  respects  jewellery,  what  is 
now  made  is  very  light.  Many  gold  rings  are  manufac- 
tured, as  well  as  gold  watch-cases,  but  very  few  articles 
are  now  made  which  consume  a  considerable  weight  of 
that  metal.  This  may  be  verified  by  referring  to  the  re- 
turns of  those  establishments  which,  in  France,  are  called 
bureaux  de  garantie. 

Who  would  not  suppose  that  in  Great  Britain,  where 
a  wealthy  aristocracy  spends  its  riches  freely,  and  where, 
since  the  peace  of  1815,  commercial  fortunes  have  in- 
creased and  multiplied  to  a  surprising  extent,  the  manu- 
facture of  articles  of  gold  must  have  undergone  a  consid- 
erable augmentation  ?  The  contrary,  however,  is  the 
fact.  I  have  before  me  the  return  of  the  duty  paid  on 
gold  plate  in  England,  from  the  commencement  of  the 
century  to  1850  inclusive,  which  appears  in  Mr.  Porter's 
excellent  work,  the  Progress  of  the  Nation.  According 
to  this  table,  the  progress  of  the  manufacture  of  articles 
of  gold  remains,  incredible  as  it  may  appear,  behind  that 
of  the  population.  From  the  first  quinquennial  period  of 
the  century  to  that  which  closed  in  1850,  the  increase  in 
the  quantity  of  gold  \vhich  paid  duty  was  50  per  cent.  ; 


NEW  OUTLET  FOR  GOLD.  107 

during  the  same  time  the  increase  of  population  was  much 
greater ;  it  doubled.  Then,  if  we  take  into  account  the 
quantity  of  gold  required  for  this  manufacture,  we  are 
amazed  at  its  smallness.  It  is  an  atom  in  comparison 
with  the  total  production.  During  the  last  quinquennial 
period  of  the  half-century,  the  annual  average  has  only 
been  7,636  ounces.  Independently  of  these  statistics  of 
Mr.  Porter,  I  have  been  enabled  to  procure  the  returns 
for  two  recent  years  (1855  and  1856).  The  average  is 
10,420  ounces,  including  that  which  is  destined  for  ex- 
portation. It  must  be  stated  that  many  articles,  such  as 
watch-cases,  are  excluded  from  this  return  ;  but  let  the 
amount  be  doubled  or  trebled,  let  it  be  quadrupled,  quin- 
tupled, or  even  more,  and  still  how  little  will  it  amount 
to  in  comparison  with  the  present  production  of  gold  ? 

From  England  let  us  pass  to  France.  Here  also  may 
be  observed  a  movement  slower  than  the  progress  of  the 
population  ;  if  we  embrace  also  an  interval  of  half  a  cen- 
tury, in  which,  it  is  true,  is  comprised  all  the  period  of 
the  revolution.  Necker,  who  must  have  been  well-in- 
formed, estimated  in  1789,  the  jewellery  manufactured  in 
France,  both  gold  and  silver,  at  20  millions  (£800,000)  ; 
in  1821,  it  was  only  21,750,000  francs,  (£870,000),  which 
drew  from  Baron  Humboldt  the  remark  that, — "  The 
tables  published  by  the  Count  de  Chabrol  would  prove,  if 
the  estimates  of  M.  Necker  are  correct,  that  the  state  of 
the  manufacture  of  jewellery  has  not  greatly  altered."  * 
Baron* Humboldt  might  have  added  that,  since  for  the 
two  metals  together  the  alteration  had  been  insignificant, 
whilst  there  had  been  a  considerable  increase  in  the  use  of 
silver  plate,  'it  necessarily  followed  that  there  must  have 
been  a  diminished  employment  of  gold.  Since  1821  a 
certain  progress  is  observable  in  France.  According  to 
the  bureaux  de  garantie,  the  average  of  the  years  1822-3-4 

*  Essay  on  New  Spain,  edition  of  1827,  Vol.  III.,  p.  467. 


108  NEW    OUTLET    FOR    GOLD. 

gives  3,059  kilogrammes  (108,065  oz.)  for  gold  ;  and 
the  average  of  the  two  years  ending  1st  Jan.,  1857,  is 
8,185  (289,205  oz.)  ;  but  from  these  quantities  a  portion 
must  be  deducted,  as  will  be  seen,  on  account  of  the  old 
metal  and  jewellery  returned  to  the  crucible.  There  are, 
then,  grounds  for  saying,  both  of  France  and  England, 
that  an  outlet  so  limited,  and  augmenting  so  gradually, 
could  not  tend  seriously  to  raise  the  consumption  of  gold 
to  the  level  of  its  greatly  increased  production. 

In  1827,  Baron  Humboldt  estimated  the  quantity  of 
gold  employed  in  all  Europe,  by  the  goldsmiths  and  jew- 
ellers, at  9,200  kilogrammes  (325,100  ounces)  ;  but  from 
this  must  be  deducted  the  old  gold  which  Necker  esti- 
mated at  the  half,  but  which  others,  with  no  better  oppor- 
tunities of  being  well-informed,  put  down  at  much  less. 
Let  us  carry  to  double  this  amount  the  gold  at  present 
worked  up  by  these  industries,  and  make  no  deduction 
for  the  metal  derived  from  the  re  melting  of  old  jewellery 
and  ornaments  ;  this  will,  if  we  admit  Necker's  hypothesis 
of  the  proportion  of  old  gold  entering  into  the  composition 
of  the  new,  quadruple  the  effective  consumption  of  gold 
in  1827.  Here,  then,  is  an  outlet  for  18,400  kilogrammes 
(650,200  ounces)  of  the  production  of  the  mines.  To 
take  a  liberal  view,  let  us  put  down  25,000  kilogrammes 
(875,000  ounces)  for  the  ensuing  ten  years,  as  the  con- 
sumption for  the  same  purposes  in  the  civilised  States  of 
North  and  South  America.  It  is  a  very  high  estimate, 
for  this  amount,  set  apart  for  the  goldsmiths  and  jewellers, 
is  exclusive  of  the  gold  required  for  lace  and  gilding,  with 
which  I  shall  have  to  deal  in  the  present  chapter,  and  for 
which  an  ample  allowance  will  be  made.  It  may  thus 
be  seen  how  far  the  demand  for  jewellery  and  ornaments 
can  counterbalance  the  excessive  supply  of  this  metal  in 
the  market ;  it  is  very  far  from  being  sufficient  for  the 
purpose. 


NEW  OUTLET  FOK  GOLD.  109 

But,  it  will  be  said,  the  world  has  absorbed  the  mass 
of  nearly  40  milliards  (1,600  millions  sterling)  of  gold 
and  silver  which  has  been  supplied  by  America  since  the 
time  of  Columbus.  True  enough,  but  on  what  condition  ? 
On  condition  that  the  value  of  silver  fell  in  the  proportion 
of  6  to  1,  and  that  of  gold  in  the  proportion  of  4  to  1. 
And  it  is  only  by  a  similar  process  (though  I  do  not  pre- 
tend to  assign  the  proportion)  that  the  large  supplies 
which  are  now  being  produced  by  the  new  mines  will  find 
an  outlet.  The  present  essay  is  written  to  prove,  not  that  > 
this  extraordinary  production  of  the  precious  metal  cannot 
be  employed  on  any  terms,  which  would  be  absurd,  but 
simply  that  it  cannot  be  absorbed  and  maintain  its  pre-  if 
sent  value  in  relation  to  other  commodities :  mankind  is 
not  rich  enough,  nor  will  it  soon  be,  to  pay  so  dearly  for 
so  large  a  mass.  To  find  an  outlet,  it  is  absolutely  requi- 
site that  so  vast  a  production  should  be  accompanied  with 
a  great  reduction  in  value. 

But  not  to  anticipate  the  conclusion,  let  us  pursue  the 
enumeration  of  the  extraordinary  channels  which  may  be 
opened  to  absorb  the  extraordinary  supply  from  Austra- 
lia and  California  ;  and,  first,  let  us,  by  way  of  finishing 
the  account  with  luxury,  allude  to  gold  lace  and  gilding. 
Paris  gilds  itself  not  a  little,  and  is  surprisingly  addicted 
to  gold  lace.  Is  there  not  in  these  two  employments  a 
consumption  large  enough  to  enable  the  producers  of  gold 
to  dispose  of  their  precious  commodity,  almost  indefinitely, 
without  any  reduction  in  value  ?  In  order  to  reply  to  this 
question,  let  us  calculate  the  quantity  of  metal  which  is  re- 
quired to  gild  a  given  surface.  Gold,  as  is  known,  is  the 
most  malleable  of  metals  ;  it  is  so  to  a  degree  of  which  it 
it  would  be  difficult  without  ocular  illustration  to  form 
an  idea.  The  goldbeater  makes  it  into  leaves,  which, 
thanks  to  the  progress  of  his  art,  are  now  so  thin  that 
fourteen  thousand  form  only  the  thickness  of  a  millimetre, 


110  NEW  OUTLET  FOB  GOLD. 

and,  consequently,  14  millions  of  leaves  laid  one  upon 
another  would  make  a  thickness  of  only  a  metre  (about 
39  inches).  A  cubic  metre  of  solid  gold,  which  in  truth 
would  not  weigh  less  than  19,258  kilogrammes  (680,440 
ounces),  would  suffice  to  gild  a  surface  of  1,400  hectares 
(about  3,450  acres),  and  1,000  kilogrammes  (35,300 
ounces)  would  cover  720,000  square  metres,  or  72  hec- 
tares with  gold  (about  179  acres.)  It  is  a  result  which 
quite  confounds  the  imagination.  And  yet  the  metal  used 
in  the  manufacture  of  gold  lace  is  spread  over  a  much 
larger  surface.  •  The  substance  of  the  threads  of  which 
this  lace  is  made  consists  of  silver,  the  surface  alone  being 
of  gold,  and  one  gramme  of  gold,  worth  3  francs  44 
centimes  (2s.  lOd.)  suffices  to  gild  a  thread  200  kilometres 
in  length  (120  miles).  In  a  piece  of  20  francs  (16s.  Sd.), 
there  is  gold  enough  to  cover  a  thread  which  would  ex- 
tend from  Calais  to  Marseilles. 

I  might  also  remark  that  in  the  calculation  of  the 
quantity  of  gold  leaf  to  be  made  from  a  cubic  metre,  or 
1,000  kilogrammes  of  gold,  I  have  spoken  as  though  the 
gold  employed  was  of  an  absolute  fineness,  which  is  not 
quite  correct.  Experience  shows  that  the  malleability  of 
gold  is  increased  by  a  slight  mixture  of  alloy,  and  which 
diminishes  proportionably  the  consumption  of  the  precious 
metal.  It  is  true  that  this  proportion  is  not  great,  it  is 
about  4  per  cent.,  and  we  must  make  a  corresponding 
abatement  from  our  estimate. 

Let  us  now  suppose  that  a  room,  suitably  gilded,  con- 
sumes five  square  metres  (a  metre  is  39  inches)  of  gold 
leaf,  which  is,  I  believe,  sufficient.  At  this  rate  1,000 
kilogrammes  (35,300  ounces)  would  gild  one  hundred  and 
forty-four  thousand  saloons  or  apartments,  that  is  to  say, 
at  least  twenty  times  the  number  which  are  thus  embel- 
lished in  one  year  in  all  those  cities  where  the  houses  are 
of  a  character  to  require  their  interiors  to  be  gilded. 


NEW    OUTLET    FOR    GOLD.  HI 

With  the  remainder  what  a  multitude  of  picture-frames, 
books,  kettle-drums,  cloths,  epaulettes,  and  all  kinds  of 
objects  might  be  clothed  in  a  dazzling  covering  of  gold  ! 
Let  the  number  of  gold  leaves  required  for  each  apartment 
be  multiplied,  let  the  number  of  books  and  picture-frames 
be  augmented,  and  still  we  shall  arrive  at  no  result  which 
deserves  a  moment's  consideration.  At  Paris,  where 
nearly  all  the  gold  leaf  is  beaten  which  is  consumed  in 
France,  and  a  part  of  Europe,  the  quantity  of  gold  oper- 
ated upon  does  not  exceed  1,150  to  1,200  kilogrammes 
(40,650  to  42,400  ounces).  I  give  this  fact  upon  the 
authority  of  a  man  of  high  integrity  who  was  at  the  head 
of  this  industry,  and  was  well  versed  in  its  statistics.* 

The  fluid  process  of  gilding,  that  is  by  means  of  a  so- 
lution of  a  salt  of  gold  in  water,  consumes  but  very  little 
metal  ;  so  that  a  very  moderate  number  of  kilogrammes 
of  gold  are  sufficient  for  the  thread  required  by  all  the  lace 
manufactories  of  Paris  and  Lyons. 

In  fine,  for  all  descriptions  of  gilding,  as  well  as  for 
every  kind  of  gold  lace,  we  shall  exceed  the  truth  in  put- 
ting down  at  .10,000  kilogrammes  (353,330  ounces),  the 
quantity  of  gold  which  may  be  required  annually  for  the 
next  ten  years.  I  am  always  arguing  on  the  assumption 
that  the  metal  does  not  fall  in  value  ;  for,  let  it  be  reiter- 
ated, if  a  considerable  depreciation  should  occur,  it  will 
be  followed  in  the  case  of  gold,  as  it  would  be  in  that  of 
any  other  article  under  similar  circumstances,  by  its  ex- 
tended use,  and  its  increased  consumption.  It  is  probable 
that,  at  the  present  moment,  5,000  'kilogrammes  (176,665 
ounces)  is  more  than  the  amount  consumed.  If  we  add 
to  the  quantity,  hypothetically  admitted,  of  10,000  kilo- 
grammes, the  amount  already  computed,  in  the  same 
spirit  of  liberality,  for  ornaments  and  jewellery,  we  shall 

*  The  late  M.  Favrel,  one  of  the  most  eminent  men  of  business  in  Paris. 


112  NEW  OUTLET  FOR  GOLD. 

reach  an  annual  consumption  of  35,000  kilogrammes 
(1,236,655  ounces),  for  the  different  arts  which  minister 
to  the  various  forms  of  luxury.  Here,  then,  is  the  limited 
employment,  which  luxury,  in  all  its  bearings,  offers  to  the 
gold  furnished  by  the  new  mines. ,  It  is  a  real  deception 
to  the  statistician,  who  might  have  expected  to  find  a  lim- 
itless outlet.  Let  us  not,  however,  omit  to  mention  one 
rather  insignificant  mode  of  consumption.  The  display  of 
gold  in  utensils,  more  or  less  massive,  is  the  luxury  of  the 
less  refined  part  of  the  community,  whose  eye  is  instinct- 
ively attracted  by  the  glare  of  a  dazzling  metal,  and  whose 
desire  is  excited  for  an  object  to  which  there  is  vulgarly 
attached  the  idea  of  great  riches.  It  is  a  species  of  mag- 
nificence which  was  reserved  for  the  sovereigns  of  primi- 
tive nations  ;  it  constituted  the  splendour  of  the  Incas, 
and  that  of  Attila,  and  of  Grenseric  ;  it  was  the  pride  of 
the  savage  races  whom  the  Europeans  discovered  in  Amer- 
ica :  these  poor  natives  carried  lumps  of  gold  suspended 
from  their  noses  and  ears.  But  our  intelligent  communi- 
ties, with  their  cultivated  minds,  decorate  their  apartments 
with  stuffs  tastefully  arranged,  and  which  .present  to  the 
eye  patterns  of  elegant  form,  and  brilliantly  or  delicately 
coloured.  They  adorn  them  with  works  of  art,  with  sculp- 
ture of  every  kind,  and  pictures  of  the  various  schools,  and 
exquisite  engravings.  This  is  a  more  enlightened  luxury, 
and  more  suited  to  an  advanced  civilisation. 

Not  that  I  would  here  maintain  the  opinion  that,  in 
a  fit  of  ideal  refinement,  civilised  nations  will  henceforth 
despise  the  glitter  of  gold  ;  I  merely  mean  to  say  that  the 
observation  of  what  is  passing  every  day  under  our  eyes, 
warrants  the  belief  that  luxury  is  seeking  its  gratification 
in  other  directions.  In  such  an  undertaking,  as  devoting 
a  large  sum  to  the  purchase  of  an  object  for  embellishing  a 
residence,  people  generally  prefer  something  which  has 
other  recommendations  than  the  weight  it  contains  of  so 


NEW  OUTLET  FOR  GOLD.  113 

valuable  a  commodity  as  gold.  The  man  of  little  taste 
may  be  flattered  by  the  possession  of  some  grand  vase  of  a 
material  which  is  worth  sixteen  hundred  times  its  weight 
in  copper,  ten  or  fifteen  thousand  times  its  weight  in  iron, 
thirteen  thousand  times  its  weight  in  wheat  ;  but  this 
price  is  so  excessively  high,  that  persons  with  any  taste 
for  the  beautiful,  however  rich  they  may  be,  pause  and 
turn  aside.  Nevertheless,  gold  has  lost  none  of  its  incom- 
parable splendour,  and  if  it  were  to  fall  considerably  in 
price,  it  is  probable  that  then,  and  only  then,  it  would  be- 
come, to  some  extent,  the  fashion,  on  condition  that  the 
merit  of  the  form  equalled  the  beauty  of  the  material. 


CHAPTER  IV. 

CONCLUSION  OF  THE  PEECEDING  CHAPTERS.— THE  FALL  OF  GOLD  VEEY 
PEOBABLE,  IF  NOT  INEVITABLE,  IN  EELATION  TO  ALL  OTHER  COM- 
MODITIES. 

IT  is  not  difficult  to  draw  a  conclusion  from  the  preceding 
analysis.  In  no  direction  can  a  new  outlet  be  seen  suffi- 
ciently large  to  absorb  the  extraordinary  production  of 
gold,  which  we  are  now  witnessing,  so  as  to  prevent  a  fall 
in  its  value.  There  is  but  one  way  of  disposing  of  these 
masses  of  gold,  it  is  by  coining  them  and  forcing  them  into 
the  current  of  circulation  into  countries  which  are  already 
sufficiently  provided  with  a  gold  currency.  This  current 
will  absorb  them,  for  it  is,  so  to  speak,  insatiable  ;  it  receives 
and  carries  off  all  that  is  thrown  into  it ;  but  the  process 
of  absorption  and  assimilation  is  on  one  condition,  namely, 
that  gold  diminishes  in  value,  so  that  in  those  transactions 
where  heretofore  ten  pieces  of  gold  had  for  example  suffi- 
ced, eleven,  twelve,  fifteen,  or  even  more,  will  be  hence- 
forth required.  In  a  word,  if  gold  is  to  enter  into  the  cir- 
8 


114  NEW  OUTLET  FOR  GOLD. 

dilation  in  indefinite  quantities,  it  is  by  being  subjected  to 
the  rigorous  law  of  a  continually  increasing  depreciation. 

And  here  is  exhibited  a  disadvantage  under  which  gold 
suffers  in  comparison  with  silver.  The  latter  rnetal  has, 
besides  being  used  for  money,  other  somewhat  extensive 
employments.  The  requisites  of  the  table,  such  as  dishes, 
plates,  spoons,'  forks,  &c.,  silver  kettle-drums,  and  church 
ornaments,  consume  a  large  quantity.  Silver  plating,  so 
much  on  the  increase  for  some  years,  will,  doubtless,  take 
off  a  considerable  amount  ;  we  are  probably  only  in  the 
infancy  of  this  interesting  industry,  and  the  consumption 
of  metal  to  which  it  gives  rise  is  small  in  comparison  with 
what  may  be  expected  for  the  future.  Gold  has,  doubt- 
less, its  employments  in  the  arts,  and  perhaps,  ere  long, 
gilding  may  become  as  general  as  plating  ;  but  to  gild 
properly  a  given  surface  requires  much  less  gold  than  it 
would  of  silver  to  cover  it  with  the  latter  metal ;  in  this 
manner,  the  peculiar  attribute  of  gold,  of  being  infinitely 
malleable,  or  of  holding  together  in  layers  infinitely  thin, 
only  tends  to  diminish  its  employment.  Thus  not  less 
than  6  grammes  of  silver  (92  grains,  troy),  are  put  upon 
a  convert,  in  the  manufacture  of  the  house  of  Cristofle  ; 
whereas  the  gilding  needed  for  covering  utensils,  picture 
frames,  or  even  ceilings,  requires  but  the  merest  atoms  of 
gold. 

I  have  explained  the  consumption  for  gilding  rooms, 
picture  frames,  and  gold  lace  ;  I  have  also  included  arti- 
cles of  jewellery  made  in  imitation  of  gold,  by  dipping 
them  rapidly  in  a  solution  containing  a  portion  of  nitrate 
of  gold.  The  strongest  gilding  given  in  M.  CristonVs  es- 
tablishment consumes  7fV  grammes  (107  grains  troy)  on 
a  dozen  dessert  converts  ;  whilst  for  silver,  with  converts, 
it  is  true,  of  a  larger  size,  it  is  72  grammes  (1,104  grains 
troy)  ;  but  there  are  summary  processes  of  gilding  which 
do  not  consume  more  than  one -tenth  of  this  proportion  of 


NEW  OUTLET  FOB  GOLD.  115 

metal.  From  the  particulars  obligingly  communicated  to 
me  by  M.  Cristofle,  it  appears  that  his  establishment  for 
gilding  and  plating  consumed,  in  1856,  4,022  kilogrammes 
[142,110  ounces]  of  silver,  and  only  17  kilogrammes  [601 
ounces]  of  gold.  In  no  one  year  has  this  house,  whose 
business  is  considerable,  consumed  in  gilding,  more  than 
27  kilogrammes  [954  ounces]  of  the  latter  metal.  M. 
Cristofle  estimates  that  the  gilding  of  metals  consumes, 
for  all  that  is  done  in  France,  only  400  or  450  kilogram- 
mes [14,130  or  15,900  ounces]  of  gold  yearly.  Now 
France  is  a  producer  of  these  articles,  not  only  for  her 
own  use,  but  for  exportation. 

To  fix  these  ideas,  and  give  precision  to  our  deduc- 
tions, let  us  now  recapitulate  the  various  employments  for 
gold  which  we  have  j  ust  designated,  representing  them  in 
figures. 

It  has  been  seen  that  the  currencies  of  those  States 
which  are  short  of  gold  are  not  likely  to  require  for  the 
next  ten  years  more  than  300,000  kilogrammes  of  this 
metal  (£42,000,000).  To  arrive  at  this  result,  it  has 
been  necessary  to  resort  to  very  forced  anticipations.  As 
for  the  increase  of  money  rendered  necessary  by  the  addi- 
tional population,  and  the  extension  of  well-being  among 
the  people  of  Europe  and  America,  I  have  made  a  large  es- 
timate in  calculating  it  at  22,000  kilogrammes  (£3,080,- 
000)  a  year,  or  220,000  kilogrammes  (£30,800,000)  for  the 
ten  years. 

In  order  to  satisfy  the  most  exacting,  I  have  estimated 
at  an  equal  amount,  220,000  kilogrammes  (£30,800,000), 
the  addition  which,  in  ten  years,  ought  to  be  made  to  the 
currency  to  keep  pace  with  the  extension  of  commercial 
operations,  strictly  so  called. 

For  wear  and  tear,  it  has  been  shown  that  we  run  no 
risk  of  valuing  it  too  low  in  putting  it  down  at  3,500 
kilogrammes  (£490,000),  or,  in  ten  years,  at  35,000 


116  NEW  OUTLET  FOR  GOLD. 

(£4,900,000).  And,  then,  for  hoarding,  with  the  addi- 
tion of  accidental  losses,  there  has  been  more  than  an 
ample  allowance  made  in  the  estimate  of  15,000  'kilo- 
grammes yearly  (£2,100,000),  or  150,000  in  ten  years 
(£21,000,000). 

It  is  an  exaggeration,  beyond  allowable  bounds,  to  put- 
down  the  quantity  of  new  gold  required  by  jewellers,  also 
for  the  various  modes  of  gilding,  and  for  gold  lace,  at  an 
average  for  the  next  ten  years  of  35,000  kilogrammes 
(£4,900,000),  or,  for  the  decennial  period,  at  350,000 
kilogrammes  (£49,000,000). 

We  thus  arrive,  exaggerating  everything,  at  a  total  of 
1,275,000  kilogrammes  (£178,500,000),  as  the  mass  of 
the  precious  metal  which  may  find  a  natural  employment 
during  the  next  ten  years.  By  the  words  natural  em- 
ployment, I  mean  that  it  should  be  absorbed  on  the  same 
conditions  as  heretofore,  and  consequently  without  being 
aided  by  a  fall  in  the  value  of  gold.  In  estimating  the 
average  annual  production,  for  the  period  of  ten  years,  now 
commencing,  at  250,000  kilogrammes  only  (£35,000,000)  ; 
and  it  may  fairly  be  expected  to  reach  300,000  (£42,000,- 
000),  the  floating  mass  which  would  remain,  and  the 
weight  of  which  would  at  the  end  of  the  decennial  period 
operate  to  depress  the  value  of  gold,  would  amount  to 
1,225,000  kilogrammes  (£171,500,000),  that  is  to  say,  to 
nearly  the  half  of  all  the'gold  that  America  has  furnished 
from  the  first  voyage  of  Columbus  to  the  discovery  of  the 
mines  of  California  in  1848,  a  period  of  three  hundred 
and  fifty-six  years. 

Let  200,000  or  300,000  kilogrammes  more  (£28,000,- 
000  or  £42,000,000)  be  subtracted,  to  provide  in  the 
most  ample  manner  against  all  contingencies,  even  the 
most  improbable,  and  still  an*  enormous  mass  will  remain 
to  exert  on  the  market  a  pressure  beyond  all  precedent. 
To  express  in  other  words  the  same  idea,  in  proportion  as 


NEW   OUTLET    FOR   GOLD. 

the  gold  shall  be  extracted  from  the  new  mines,  all  which 
shall  not  have  been  absorbed  by  the  industrial  arts,  will 
enter  into  the  currencies  of  all  those  countries  which  will 
admit  it  in  that  capacity,  and  in  each  of  them  it  will  diffuse 
itself,  all  other  things  being  equal,  in  proportions  meas- 
ured by  the  facilities  which  legislation  may  offer  it.  But 
in  these  countries  it  will  be  in  great  excess,  relatively,  of 
all  that  could  have  been  required  for  the  medium  of  ex- 
change, if  the  metal  had  preserved  its  full  value  ;  that  is 
to  say,  gold  will  circulate  there  on  precisely  the  conditions 
which  would  be  indicated  if  we  had  to  demonstrate  the 
process  necessary  for  determining  infallibly  its  fall. 

It  may  not  be  out  of  place'  to  add  that  the  new  mines 
have  already  yielded  a  considerable  quantity  of  new  gold, 
hardly  to  be  valued  at  less  than  1,200,000  kilogrammes 
(£168,000,000);  so  that  the  circulation,  in  all  those 
countries  where  this  metal  is  admitted  as  an  essential 
element  of  the  monetary  system,  is  already  saturated. 
This  is  perceptible  enough  where  business  is  in  its  normal 
state,  and  not  under  the  influence  of  those  crises  which 
give  rise  to  an  extraordinary  want  of  all  the  instruments 
of  commercial  liquidation,  and  when  it  seems  as  if  it  were 
impossible  to  have  enough  of  the  precious  metals.  As 
soon  as  affairs  resume  their  natural  course,  we  see,  in 
those  countries  just  mentioned,  gold  flowing  into  the 
banks,  and  into  the  great  establishments  of  credit  and 
deposits.  It  cannot,  therefore,  now  be  justly  said  that 
there  are  great  voids  to  fill  up  in  the  monetary  mechanism 
of  the  principal  States,  and  that  thus  the  production  of 
new  gold  is  a  welcome  event.  There  are,  on  the  contrary, 
grounds  for  preoccupying  ourselves  with  the  indications, 
already  apparent,  of  a  state  of  plethora. 

Unless,  then,  we  possess  a  very  robust  faith  in  the 
immobility  of  human  affairs,  we  must  regard  the  fall  in 
the  value  of  gold  as  an  event  for  which  we  should  pre- 


218  NEW  OUTLET  FOR  GOLD. 

pare  without  loss  of  time.  And  who  can  be  ignorant  that 
the  value  of  gold  in  relation  to  productions  generally,  and 
in  relation  to  silver  in  particular,  instead  of  being  fixed, 
has  experienced  very  numerous  variations — that  it  has 
been  undergoing  modifications,  sometimes  in  one  sense, 
sometimes  in  another,  from  the  beginning  of  the  world, 
under  the  influence  of  forces  far  less  energetic  than  those 
which  are  in  action  in  our  day  ?  I  refer  those  who  desire 
information  on  this  subject  to  a  work,  where  an  illustrious 
authority,  Baron  Humboldt,  has  treated  it  with  the  supe- 
riority which  distinguishes  him,  shedding  upon  the  ques- 
tion some  of  that  vivid  light  which  he  carries  everywhere 
with  him.  There  will  be  seen,  for  example,  that  in  throw- 
ing into  the  circulation  of  the  Koman  world  a  mass  of 
gold  very  important,  it  is  true,  Julius  Ceesar  occasioned 
for  that  metal  a  fall  so  great  that  some  time  after  it  had 
been  worth  seventeen  times  its  weight  in  silver  it  fell  to  be 
only  worth  nine  times.0  If  the  value  of  gold  has  varied 
every  time  that  new  circumstances  have  modified  the  re- 
lation between  the  supply  and  demand,  and  if  it  has  risen 
or  fallen  in  proportion  to  the  change  which  manifested  itself 
in  this  relation,  by  what  strange  witchcraft  are  the  natu- 
ral causes  of  the  fall  of  gold  to  be  paralysed,  now  that 
they  are  *  displaying  themselves  in  such  unusual  propor- 
tions ? 

Independently  of  all  detailed  calculation  like  the  pre- 

*  This  work  of  the  patriarch  of  the  sciences  of  observation  is  anterior, 
by  several  years,  to  the  discovery  of  the  mines  of  California ;  it  dates  from 
1838.  The  Journal  des  Eeonomistes,  numbers  for  April  and  May,.  1848, 
give  a  good  translation  of  it,  by  M.  Michel  Rempp.  Upon  the  same  subject 
of  the  numerous  variations  that  the  value  of  gold  has  undergone  in  relation 
to  silver,  I  could  cite  a  great  number  of  other  works:  I  will  mention,  for 
example,  the  treatise  of  Lord  Liverpool,  for  England  ;  the  Traite  des  Mon~ 
naies,  of  Leb'lanc :  the  work  of  Mr.  Jacob,  of  which  I  have  here  made  fre- 
quent use ;  and  also  the  memoirs  of  M.  Charles  Lenormant,  my  learned 
colleague  of  the  Institute,  and  of  his  son  M.  Francois  Lenormant.  I  have 
already  referred  above  to  the  Traite  d'Economie  Politique  of  M.  Roscher. 


NEW    OUTLET    FOR    GOLD.  119 

ceding,  there  is  a  general  way  of  convincing  oneself  of  the 
impending  fall  of  gold,  at  least  if  some  cause,  at  present 
impossible  to  foresee,  should  not  suddenly  put  an  end  to  its 
extraordinary  production.  The  metal  which  is  now  being 
extracted  in  such  abundance,  in  comparison  with  the  past? 
must,  if  converted  into  money,  affect  its  value  by  its  mass. 
To  prevent  it  from  rushing  into  the  currency,  the  demand 
for  luxury  must  find  it  a  sufficient  outlet  ;  but  is  this  pos- 
sible ?  There  has  been  no  scarcity  of  gold  in  the  market 
since  the  working  of  the  mines  in  Northern  Russia.  The 
chief  part  of  that  which  has  been  yielded  by  Australia  and 
California  has,  therefore,  constituted  a  real  surplus  ;  now, 
how  can  the  developments  of  luxury  absorb  it  ?  A  few  of 
our  newly  enriched  men,  who,  because  existence  is  suddenly 
transformed  for  them,  suppose  that  every  thing  on  the  face 
of  the  earth  is  changed  for  the  better,  may  well  imagine  that 
pomp  and  luxury  will  offer  to  the  metal  which  issues  from 
the  mines  a  limitless  outlet  :  but  any  one  who  reflects,  ob- 
serves, and  calculates,  will  form  a  different  opinion.  No, 
mankind  is  not  in  a  condition  to  spare  from  the  fruits  of 
its  labour  the  large  portion  which  it  would  be  necessary  to 
hand  over  to  the  producers  of  gold,  to  avert  a  fall  in  the 
value  of  their  metal,  for  mankind  is  still  poor,  even  in  the 
most  civilised  countries.  To  pretend  that,  to  satisfy  its 
taste  for  pomp  and  display,  it  will  continue  to  take,  at  its 
old  price,  all  the  gold  of  the  new  mines,  is  as  if  one  were 
to  say  that  mankind  is  suddenly  become  sufficiently  rich 
to  devote  4  or  500  millions  (£16  to  £20,000,000),  if  not 
more,  to  the  acquisition  of  a  supplement  of  articles  of  lux- 
ury, and  of  that  very  kind,  too,  which  most  deserves  the 
name*of  superfluities  ; — 4  or  500  millions,  seeing  that  at 
the  price  which  gold  has  maintained,  almost  intact  up  to 
the  present  time,  the  quantity  of  this  metal  annually 
thrown  upon  the  general  market,  approaches,  in  round 
numbers,  &  milliard  (£40,000,000),  and  that  the  employ- 


120  NEW  OUTLET  FOR  GOLD. 

ments  which  may  be  reasonably  foreseen  will  not,  perhaps, 
consume  the  half  of  it.  The  civilised  world,  far  from  be- 
ing able  to  indulge  in  such  caprices,  has  all  sorts  of  press- 
ing necessities  to  provide  for,  and  with  which  it  is  more 
seriously  preoccupied.  People  are  still  badly  fed,  badly 
clothed,  badly  lodged,  and  badly  supplied  with  all  those 
objects  which  minister  to  the  intelligent  wants  and  the 
purer  satisfactions  of  an  elevated  humanity, — satisfactions 
which,  whatever  may  be  said,  are  every  day  more  and  more 
appreciated.  Even  among  the  easy  classes,  how  many 
wants  are  there,  to  satisfy  which  will  claim  precedence  of 
the  taste  for  arraying  themselves  in  the  splendour  of  gold  ? 
The  currency,  then,  offers  the  one  sole  channel  by  which 
the  principal  part  of  this  enormous  production  of  gold  can 
find  an  outlet.  Already,  several  nations  have  closed  the 
door  against  it.  How  then  can  it  fail  to  encumber  the 
channels  of  circulation  in  those  countries  which  remain 
faithful  to  a  gold  currency  ?  In  other  words,  how  shall 
we  escape  a  general  dearness  of  commodities  in  France, 
if  we  maintain  for  gold,  in  our  monetary  system,  the  place 
which  in  fact  it  now  occupies  ? 


SECTION  Y. 


CHAPTERS  I.  ioV. 

ON  THE  PAET  ASSIGNED  TO  GOLD  IN  THE  MONETAEY  LEGISLATION 
OF  FEANCE. 

THIS  section  is  devoted  to  an  inquiry  into  the  origin  of 
the  monetary  laws  of  France,  with  a  view  to  determine 
whether  its  legislators  contemplated  the  existence  of  the 
double  standard  which  is  now  causing  a  substitution  of 
gold  for  silver  in  the  currency  of  that  country.  The  ques- 
tion is  of  the  utmost  importance  to  the  French  reader,  and 
its  solution  is  probably  the  main  object  which  the  author 
has  had  in  view  ;  but  as  England  stands  in  a  totally  dif- 
ferent position,  having  a  well-defined  gold  standard  and 
legal  tender,  with  an  expressed  legal  demonetisation  of 
silver  for  "sums  above  forty  shillings,  the  argument  has  no 
practical  bearing  upon  the  interests  of  this  country,  and  I 
have  obtained  M.  Chevalier's  consent  to  omit  the  detailed 
translation  of  this  section.  I  refer,  therefore,  to  the  orig- 
inal work  for  an  able,  elaborate,  and,  as  I  think,  conclu- 
sive argument,  showing  that  all  the  leading  statesmen  who 
took  a  part  in  framing  the  existing  monetary  law  of  France, 
agreed  in  the  propriety  of  having  one  standard,  of  selecting 


122         GOLD   IN   FRENCH    MONETARY   LEGISLATION. 

silver  for  that  purpose,  and  of  making  the  franc  the 
monetary  unit,  and  that  it  has  been  only  by  the  unforeseen 
and  unexpected  increase  of  gold,  owing  to  the  new  dis- 
coveries, that  the  obvious  and  avowed  intentions  of  the 
French  legislators  have  been  defeated. 

The  author  relies  especially  on  the  Report  of  the  Min- 
ister of  Finance,  Gaudin,  to  the  Consular  Government, 
which  led  to  the  Act  of  the  7th  germinal ',  year  11  (28th 
March,  1803),  and  which  definitively  constituted  the  pres- 
ent monetary  system  of  France.  He  gives  the  following 
extract  : — "  Whoever  lends  200  francs  shall  never  at  any 
future  time  be  repaid  with  less  than  one  kilogramme  of 
silver,  which  shall  always  be  worth  200  francs,  and  shall 
never  be  worth  more  or  less." 

The  conclusion  to  which  our  author  comes,  after  an 
elaborate  appeal  to  facts  and  official  documents,  is  that 
"the  creditor  of  the  State  who  is  entitled  to  100  francs 
a  year,  for  example,  has  an  inalienable,  imprescriptible, 
and  absolute  right  to  receive  a  hundred  times  5  grammes 
of  silver,  of  the  standard  of  9-10ths  fineness.  He  would  be 
despoiled  of  his  property  if  he  were  paid  with  a  quantity 
of  gold  less  than  this  equivalent,  in  the  same  way  as  if 
his  claim  were  discharged  with  only  80  or  75  discs  of  sil- 
ver, of  the  weight  of  5  grammes,  of  the  fineness  of  9-10ths; 
instead  of  100  ;  or  as  if  he  were  paid  with  100  discs  con- 
taining 4  grammes  of  fine  silver  only,  instead  of  4J." 
And  he  finally  makes  the  following  appeal  to  the  con- 
science and  self-respect  of  France  : — 

"  It  is  true  that  there  is  no  tribunal  before  which  the 
State  can  be  made  to  appear  and  hear  itself  condemned 
to  pay  the  arrears  of  its  dividends  in  silver  to  the  public 
creditor ;  or,  if  gold  has  been  resorted  to,  to  pay  a  real 
equivalent  of  the  quantity  of  silver  which  corresponds  to 
the  number  of  francs  borne  upon  the  dividend  warrant. 
But,  if  no  such  jurisdiction  has  been  established,  it  is  be- 


GOLD    IN    FRENCH    MONETARY    LEGISLATION.          123 

cause  it  has  been  supposed  that  the  State  would  interpret 
with  exactitude  the  law,  both  when  it  is  against  and  when 
it  is  in  favour  of  itself,  and  is  it  well  that  society  should 
have  to  repent  that  it  has  adopted  this  hypothesis  ?  In 
this  case  exactitude  assumes  another  name — honesty. 
And  even  if  there  be  no  precise  jurisdiction  before  which 
the  State  can  be  summoned  by  the  instrumentality  of  a 
bailiff,  and  be  compelled  to  make  an  appearance,  there 
exists,  nevertheless,  a  tribunal  by  which  it  can  be  judged, 
and  whose  decisions,  though  tardily  given,  and  involving 
no  material  consequences,  are  yet  not  less  formidable,  and 
strike  with  terror  even  the  most  powerful.  It  is  the  tri- 
bunal of  history,  by  which  all  governments  know  they 
must  one  day  be  judged  with  an  impartiality  which  they 
sometimes  anticipate  with  hope,  but  which  ought  always 
to  be  felt  as  a  restraint.  In  dealing  with  a  government 
which  respects  itself,  it  suffices  to  invoke  this  august  tri- 
bunal, the  last  argument  of  a  people,  the  supreme  support 
of  right,  and  the  bulwark  of  the  feeble  against  the  strong, 
to  confirm  it  in  the  sentiment  of  justice  even  when  it 
shall  find  itself  under  the  temptation  to  swerve  from  it." 


SECTION  VI. 


CONSEQUENCES  OF  THE  FALL  IN  THE  VALUE 
OF  GOLD. 


CHAPTER  I. 

A  GENEEAL  DISTINCTION  BETWEEN  THOSE  PRIVATE  INCOMES  WHICH 
WILL,  AND  THOSE  WHICH  WILL  NOT  BE  AFFECTED.  OF  A  CERTAIN 
COLLECTIVE  LOSS  WHICH  THE  PEOPLE  OF  FEANCE  WILL  SUFFEE. 

I  WILL  suppose  the  case  of  an  inhabitant  of  London,  who 
is  possessed  at  the  present  time  of  a  certain  income,  for 
example,  of  £1,000  sterling.  Assuming  the  event  of  the 
fall  in  the  value  of  gold  to  have  been  completely  consum- 
mated, he  will  continue  to  receive,  as  at  present,  for  every 
pound  sterling  composing  his  revenue  a  metallic  disc  con- 
taining 7  grammes,  318  milligrammes  (113  grains)  of  fine 
gold,  for  that  is  what  constitutes  the  piece  called  a  sov- 
ereign, or  the  pound  sterling.  But  the  fall  being  accom- 
plished, if  gold  has  lost  the  half  of  its  value,  then,  in  trans- 
actions where  one  piece  of  gold  was  previously  sufficient, 
two  will  be  required,  so  that  with  the  same  number  of  discs 
the  individual  in  question  will  only  be  able  to  procure  in 
bread,  in  meat,  in  all  kinds  of  articles,  in  every  descrip- 


FALL  IN  THE  VALUE  OF  GOLD.        125 

tion  of  gratification.,  the  half  of  what  he  would  have  ob- 
tained before  this  monetary  revolution.  Thus,  in  order 
that  he  might  not  be  impoverished,  in  other  words, 
that  he  might  have  the  same  subsistence,  it  would  be 
necessary  that  his  income  should  have  nominally  doubled 
itself,  that  it  should  be  £2,000  instead  of  £1,000.  This 
observation  relative  to  a  person  residing  in  London  would 
apply  equally  to  an  inhabitant  of  Paris,  provided  we  still 
continue  the  tolerance,  not  to  say  the  negligence,  by  virtue 
of  which  gold  is  unduly  circulated  on  the  footing  estab- 
lished by  the  law  7  Germinal,  year  11,  notwithstanding 
that  events  have  since  overthrown  the  hypothesis  on 
which,  so  far  as  gold  is  concerned,  that  law  was  framed. 

It  follows,  therefore,  that  if  we  would  particularise  the 
persons  who  will  be  more  or  less  deeply  affected  by  the 
fall  in  gold,  we  have  only  to  select  those  whose  income, 
expressed  in  monetary  units  (the  pound  sterling  in  Eng- 
land, and  the  franc  in  France),  will  not  find  itself  aug- 
mented, naturally  and  by  a  self-adjusting  process,  in  exact 
proportion  to  the  fall,  and  by  the  very  fact  of  the  fall  in 
gold. 

All  those  persons,  whose  incomes  expressed  in  mone- 
tary units  remain  the  same,  would  be  injured,  by  the 
change  to  the  extent  of  the  half  of  their  income,  all  other 
things  being  equal.  The  national  creditor  is  the  charac- 
teristic type  of  this  class  of  sufferers. 

The  proprietor  of  government  stock  is  in  fact  the 
holder  of  a  title  by  which  a  certain  State  engages  to  pay 
yearly  a  given  number,  agreed  upon  previously,  of  francs 
or  pounds  sterling ;  in  other  words,  a  well-defined  quan- 
tity of  metal.  The  current  value  of  the  capital  of  the 
public  funds  in  each  State  is  regulated  by  this  very 
quantity  ;  all  other  things,  such  as  the  solvency  of  the 
government,  the  degree  of  confidence  which  it  inspires, 
and  the  abundance  of  capital  upon  the  market,  being 
equal. 


126  CONSEQUENCES   OF    THE    FALL 

All  commodities  excepting  gold,  and  every  kind  of 
property  excepting  that  of  which  the  income  is  from  the 
present  fixed,  as  is  the  case  with  the  government  funds, 
ought,  from  the  moment  that  the  monetary  crisis  is  ter- 
minated, to  have  attained  in  a  gold  currency  double  the 
price  which  they  are  at  present  worth,  upon  the  supposi- 
tion, quite  arbitrary  I  admit,  of  the  depreciation  reaching 
fifty  per  cent.  Thus,  a  house  or  a  landed  estate  now 
worth  £4,000  or  100,000  francs,  would  then  sell  for 
£8,000  or  200,000  francs.  The  hectolitre  of  corn  or  of 
wine,  the  quintal  of  iron,  or  the  metre  of  calico  will  un- 
dergo the  same  rise,  at  least  if  no  change  conducive  to 
cheapness  be  introduced  into  the  conditions  of  their  pro- 
duction, or  into  the  relations  between  the  supply  and 
demand.  It  will  be  the  same  eventually  with  the  wages 
,  of  labour,  and  with  all  personal  services,  whether  rendered 
in  the  factory  or  the  farm,  or  from  the  liberal  professions  : 
we  are  warranted  in  believing  that  their  value  will  have 
doubled. 

Thus,  as  a  definitive  analysis,  the  proprietors  of  lands, 
houses,  and  other  real  estates,  manufacturers,  merchants, 
and  their  auxiliaries  of  every  kind  ;  public  functionaries  of 
all  ranks' ;  and  also  those  who  follow  the  different  learned 
professions,  will  all  find  themselves  in  the  end  compensa- 
ted in  the  new  state  of  things  with  advantages  equal  to 
those  which  they  now  enjoy, — all  other  things  being  equal. 
It  is  another  class  of  persons,  whom  we  have  previously 
defined  in  a  general  way,  who  would  have  to  submit  to  a 
sacrifice  in  proportion  to  the  fall  in  the  precious  metal. 

Looking  merely  to  the  substitution  which  would  have 
to  be  made  in  the  currency  of  a  country  like  France,  where 
gold  is  taking  the  place  of  silver,  that  country  would  ex- 
perience a  sense  of  very  serious  disappointment  at  having 
exchanged  a  commodity  which  has  actually  a  fixed  value 
. — its  coined  silver — for  another  metal  the  value  of  which 


IN    THE   VALUE   OF   GOLD.  127 

is  declining  and  must  fall  one  half,  according  to  the  sup- 
position which  we  have  made,  and  which  we  have  adopted 
solely  for  clearness  of  speech  and  precision  of  argument. 
The  quantity  of  silver  on  which  this  disastrous  exchange 
had  been  effected  to  the  1st  January,  1858,  was  not  less 
than  a  milliard  (£40,000,000),  which  has  been  bartered 
for  gold  at  the  rate  of  15^  kilogrammes  of  silver  against 
1  kilogramme  of  gold.  At  this  rate,  France  will  find  at 
the  close  of  the  fall  that  she  has  been  on  an  immense 
scale,  almost  imitating  the  trade  of  a  certain  sporting  in- 
dividual who,  for  a  wager,  passed  a  morning  on  London 
Bridge  offering  sovereigns  to  the  passengers  in  exchange 
for  shillings.  Assuming  that  at  the  point  of  departure 
the  silver  currency  of  France  amounted  to  2J  milliards, 
(£100,000,000),  this  beautiful  operation  would  cost  her 
a  very  considerable  amount,  a  sum  so  much  the  nearer  to 
1,250  millions  (£50,000,000)  in  proportion  as  the  ab- 
straction of  her  silver  had  been  more  rapidly  effected  ;  and 
down  to  the  commencement  of  1858,  the  silver  was  flow- 
ing out  of  France  at  a  very  great  speed.  It  would  be 
more  than  the  above  large  sum,  if  the  depreciation  of  gold 
were  upwards  of  one  half,  or  if,  being  one  half  only,  the 
silver  currency  of  France  had  been  at  the  point  of  depart- 
ure upwards  of  2^  milliards  (£100,000,000). 

The  sum  of  1,250  millions  (£50,000,000)  is  too  large 
to  be  lightly  sacrificed,  and  yet  it  is  not  the  loss  which 
seems  to  me  the  most  to  merit  our  attention.  The  great 
danger  and  the  great  evil  are  the  anxieties,  the  uncer- 
tainty, and,  finally,  the  injuries  which  will  fall  upon  a 
multitude  of  interests  calling  for  our  consideration  by 
their  mass,  and  for  our  respect  by  the  justice  of  their  case 
and  the  sympathy  which  it  excites. 


128  CONSEQUENCES    OF    THE   FALL 


CHAPTER  II. 

OF    THE   SUFFEEINGS   AND   DIFFICULTIES   WHICH  WILL  ACCOMPANY 
THE  TEANSITION. 

IT  is  not  merely  the  ultimate  result  that  should  be  con- 
sidered :  the  statesman  and  the  administrator  ought  also 
to  take  largely  into  account  the  transition,  that  is  to  say, 
the  rather  lengthened  period  which  must  intervene  before 
gold  shall  have  achieved  its  fall,  and  regained  almost  a 
stable  value  ;  or,  it  might  be  more  proper  to  say,  the 
space  of  time  which  must  elapse  before  the  full  effects  of 
the  fall  in  gold  shall  have  been  realised  in  all  their  bear- 
ings. This  transition  will  be  an  interval  painful  to  pass 
over,  and  will  be  marked  by  innumerable  shocks  and  suf- 
ferings, of  which  I  am  about  to  give  a  summary  idea  :  it 
will  be  the  occasion  for  offering  a  few  details  upon  the 
different  interests  which  are  likely  to  be  affected  by  the 
fall  in  the  value  of  tfo.e  precious  metal. 

During  this  transition,  then,  the  value  of  all  proper- 
ties will  be  subjected  to  a  painful  uncertainty,  and  to  in- 
jurious fluctuations.  It  will  be  still  worse  for  those  per- 
sons to  whom  I  have  already  alluded,  whose  incomes  con- 
sist of  a  sum  of  money  (Napoleons  or  sovereigns)  fixed  in 
advance.  They  will  live  in  a  perpetual  state  of  trouble, 
anxiety,  and  uneasiness.  They  will  sink  by  whole  sec- 
tions from  their  present  state  to  another  in  which  they 
will  enjoy  only  the  half  of  their  previous  comforts  ;  rea- 
soning, as  I  always  do,  upon  the  assumption  that  gold  falls 
to  the  half  of  its  present  value.  They  will  be  flung  head- 
long, without  rule  or  measure,  down  to  a  lower  station, 
and  without  ever  having  the  chance  of  preparation,  for  it 
is  the  very  essence  of  changes  of  this  kind,  subjected  as 
they  are  to  many  opposing  influences,  to  pursue  an  irregu- 


IN  THE  VALUE  OF  GOLD.  129 

lar  and  disorderly  course.  Now,  the  persons  of  whom  I 
am  here  speaking,  comprise  a  very  numerous  and  various 
class.  They  are,  in  the  first  place,  the  creditors  of  the 
State,  of  departments,  of  cities,  and  of  joint -stock  com- 
panies. To  form  an  idea  of  the  number  of  persons  and 
families  who  would  be  comprehended  under  this  head,  it 
suffices  to  call  to  mind  that,  in  England,  the  capital  of 
the  national  debt  amounts  to  20  milliards  of  francs 
(£800,000,000).  I  am  unable  to  say  what  may  be  the 
amount  of  the  debts  owing  by  local  bodies,  and  by  public 
companies  in  the  British  islands  ;  but  I  run  no  risk  of  de- 
ceiving myself  in  asserting  that  it  is  an  enormous  sum. 
In  France,  the  capital  of  the  funded  debt  is  nearly  7J 
milliards  (£290,000,000),  deducting  the  amount  belong- 
ing to  the  sinking  fund.  The  number  of  persons  interested, 
if  it  were  determined  by  that  of  the  entries  in  the  books, 
would  amount  to  more  than  a  million.*  The  departments 
and  the  cities  owe  a  very  large  sum,  and  the  bonds  of  the 
railway  companies,  without  speaking  of  the  debts  of  other 
companies,  rise  to  a  very  great  amount. 

There  would  be,  besides,  all  the  superannuated  public 
servants,  from  whose  salaries  had  previously  been  deducted 
the  amount  of  their  pensions,  as  well  as  all  those  who 
might  undergo  a  similar  ordeal  up  to  the  time  when  the 
law  should  have  fixed  a  new  scale  of  pensions  ;  all  per- 
sons who  should  have  lent  money  for  a  long  term  on 
mortgage  ;  all  those  who  lived  upon  fixed  incomes  of  long 
duration  ;  individuals  or  companies  like  that  of  the  credit 
fonder,  who  were  in  the  receipt  of  annuities  in  payment 

*  On  the  1st  January,  1857,  the  capital  of  the  funded  debt  amounted  to 
8,031,992,446  francs  (£321,279,700).  The  interest  of  the  sinking  fund 
amounted  to  25,462,159  francs  (£1,018,486),  which  is  equal  to  a  capital  of 
about  750  millions  (£30,000,000).  The  number  of  entries  in  the  great  book 
was  1,028,284.  The  interest,  including  that  of  the  sinking  fund,  amounted 
to  299,099,242  francs  (£11,963,970). 

9 


130  CONSEQUENCES   OF    THE    FALL 

for  loans  of  capital ;  those  who  might  have  invested  their 
property  for  life  ;  and  all  those  proprietors  who  might 
have  let  their  land  on  long  leases.  In  the  latter  case, 
until  the  metal  had  found  a  stable  value,  long  leases,  so 
much  advocated  by  agriculturists,  would  be  a  serious  evil 
to  the  landowner,  and  thus  the  monetary  crisis  would  re- 
act in  a  disastrous  manner  on  agriculture,  and  tend  to 
place  it  in  a  retrograde  position. 

We  might  add  to  this  list,  in  a  great  measure,  the 
multitude  of  public  servants,  civil  and  military.  Not  that 
they  would  be  precluded  from  the  hope,  under  such  cir- 
cumstances, of  an  augmentation  of  salary  ;  we  may  sup- 
pose that  a  time  would  come,  when  by  successive  additions 
to  their  pay,  they  would  receive  in  the  number  of  francs 
double  their  present  salary  ;  but  it  is  in  the  nature  of  things 
that  additions  of  this  kind  arrive  by  a  very  slow  process. 
This  is  proved  by  what  we  see  taking  place  with  regard  to 
many  functionaries,  even  those  who  enjoy  the  greatest  public 
esteem,  as,  for  instance,  the  magistracy.  For  how  many 
years  has  the  same  tale  been  told  them,  that  they  are 
always  on  the  eve  of  an  increase  of  their  incomes,  which 
are  notoriously  inadequate,  but  the  morrow  never  comes. 
The  painful  and  almost  humiliating  position  of  a  peti- 
tioner for  an  increase  of  salary,  would  have  to  be  again 
and  again  submitted  to  by  the  government  employes,  be- 
cause the  force  which  -causes  the  depreciation  in  the  value 
of  gold,  acting  only  successively,  it  would  be  by  three  or 
four  intermediate  steps,  with  difficulty  climbed,  that  they 
would  have  to  pass  before  their  salary  reached  its  normal 
rate.  For  them,  then,  there  would  be  a  constant  anxi- 
ety ;  they  would  always  feel  themselves  in  danger  of  being 
left  with  insufficient  means  for  the  subsistence  of  their 
families. 

There  is  reason  to  believe  that  the  administration  of 
the  affairs  of  the  country  would  suffer  from  this  sad  condi- 


IN  THE  VALUE  OF  GOLD.  131 

tion,  moral  and  material,  of  the  servants  of  the  State.  It 
is  natural  that  they  who  believe  themselves  insufficiently 
rewarded  for  the  pains  they  bestow,  and  the  services  they 
render,  should  fall  off  in  their  devotion  and  slacken  in 
their  zeal.  There  may  be  exceptional  cases  of  individuals 
who  are  above  these  worldly  motives  ;  but  the  majority 
bow  to  them,  especially  after  a  little  time.  We  are  not 
justified,  after  ail,  in  requiring  from  functionaries  all  the 
activity  and  care  which  the  business  of  the  State  demands, 
if  we  persist  in  paying  them  badly.  Inadequate  salaries 
deter  numbers  of  men,  who  know  their  own  value,  from 
entering  the  public  service,  and  drive  them  into  private 
employments.  The  best  of  natures  may,  under  such  cir- 
cumstances, become  embittered.  No  one  can  be  more 
inclined  than  myself  to  bear  testimony  to  the  disinterest- 
edness of  French  functionaries.  They  are,  at  least,  in  this 
respect,  upon  a  par  with  those  of  any  other  nation.  But 
there  is  no  reason  why  they  should  be  subjected  to  the 
temptation  which  flows  from  straitened  circumstances,  and 
which  has  perverted  the  administrative  morals  of  a  certain 
great  State  which  I  could  mention. 

All  the  liberal  professions,  such  as  barristers,  physi- 
cians, professors  of  every  kind,  engineers,  architects,  and  a 
multitude  of  agents  of  every  description,  would  also  have 
to  raise,  again  and  again,  the  amount  of  their  fees,  a  pro- 
cess which  would  often  endanger  their  position,  which  they 
had  flattered  themselves  to  be  secure. 

For  the  working  classes  it  would  be  a  trying  ordeal. 
In  a  certain  point  of  view  they  may  be  said  to  work  for 
fixed  salaries  ;  because,  in  those  countries,  especially,  where 
population  is  somewhat  dense,  the  employers  of  labour  re- 
sist the  increase  of  wages,  which  deranges  their  plans  and 
baffles  their  calculations.  Experience  shows  that  when 
provisions  rise  wages  are  not  necessarily  raised  in  the  same 
proportion.  Not  that  an  upward  movement  of  wages  does 


132  CONSEQUENCES    OF    THE    FALL 

not  follow  a  continued  dearness  of  provisions,  but  in  the 
majority  of  employments  it  follows  far  behind.  The 
working  population  are  of  all  classes  of  society  the  most 
dependent,  because  they  are  the  most  necessitous.  Being 
the  least  able  to  wait,  owing  to  the  pressure  of  want,  they 
are  the  more  apt  to  resign  themselves  to  the  terms  offered 
them.  Hence  it  is  that  the  benefits  which  they  expect  to 
derive  from  a  rise  of  wages  are  only  yielded  to  them  after 
many  delays.  It  were  easy  to  cite  examples  in  proof  of 
this  assertion.  It  has  been  the  subject  of  remark  by  Mr. 
Tooke,  in  his  important  work  the  History  of  Prices.  In 
his  historical  inquiry  respecting  the  precious  metals,*  Mr. 
Jacob  has  several  remarks  in  the  same  sense,  and  among 
others  he  states  his  opinion  that  the  institution  of  the 
Poor-Law,  which  it  is  known  dates  from  the  reign  of  Eliz- 
abeth, was  in  England  the  effect  of  the  changes  caused  by 
the  fall  in  the  precious  metals.  This  opinion  has  been  re- 
cently reproduced  by  an  English  writer,  Mr.  James  Mac- 
laren,  in  a  remarkable  publication,  the  title  of  which  even 
is  calculated  to  excite  an  interest,  and  to  which  I  shall 
again  shortly  refer.f 

The  same  observation  applies  to  the  numerous  class  of 
other  employes  in  manufactures  and  commerce,  because 
these  employments  are  also  overburdened.  Those  only, 
who  by  their  talents  are  above  the  average,  would  be  able 
to  command  an  immediate  increase  of  remuneration  in 
metallic  money  ;  men  of  capacity,  in  whatever  walk  of  life, 
are  the  exceptions  ;  manufacturing  capitalists,  or  intelli- 
gent merchants,  are  too  happy  to  find  them,  and  neglect  no 
means  of  retaining  them.  But  it  is  not  with  the  exceptions, 
but  the  masses,  that  we  ought  to  occupy  ourselves. 

*  On  the  Precious  Metals,  Vol.  II.,  Chap.  XX. 

f  Letter  to  the  Chancellor  of  the  Exchequer,  on  the  resolution  to  whjch 
the  German  States  have  come  to  adopt  the  silver  standard,  and  on  some 
circumstances  which  render  an  invariable  measure  of  value  of  more  im- 
portance to  England  than  to  any  other  country. 


IN  THE  VALUE  OF  GOLD.  133 

Landed  proprietors  would  be  a  privileged  class  in  the 
midst  of  this  general  derangement,  inasmuch  as  the  value 
of  land  would  increase  gradually  in  proportion  to  the  fall 
of  gold;  at  the  same  time  that  the  price  of  provisions, 
which  constitutes  their  income,  would  also  rise.  Yet  even 
they  would,  during  the  transition,  have  their  share  of  care 
and  embarrassment.  Their  path  would  be  strewn  with 
difficulties  every  time  they  had  to  sell  their  land  ;  for 
what  was  at  each  instant  the  legitimate  rise,  the  justifia- 
ble increase  of  price,  would  be  difficult  if  not  impossible 
to  determine  with  any  accuracy.  In  this  article,  as  with  a 
multitude  of  others,  transactions  would  assume  a  gambling 
character. 

It  would  be  easy  to  cite  many  investments,  at  present 
very  much  sought  after,  which  would  become  hazardous, 
inasmuch  as  the  capital  would  diminish  by  a  self-acting 
process,  and  waste  away,  so  to  speak,  by  a  species  of  con- 
sumption. Such  investments,  so  long  as  the  transition 
lasted,  would  lose  the  favour  with  which  they  are  now  re- 
garded. In  this  category  I  should  include  all  those  which 
may  be  termed  financial  investments,  that  is  to  say,  those 
of  which  not  only  the  capital  is  valued  in  money,  but 
which  will  or  may  at  a  given  moment  be  converted  into  a 
sum  of  money  fixed  or  nearly  so  beforehand,  I  mean  into 
a  weight  of  metal  previously  determined  with  greater  or 
less  precision.  I  have  already  cited  the  public  funds  and 
railway  bonds.  Bank  shares,  and  those  of  similar  estab- 
lishments, partake  of  the  same  character.  In  the  countries 
to  which  my  present  statement  refers, — and  I  repeat  that 
it  is  those  which  should  possess  in  their  monetary  system 
the  gold  standard,  as  well  as  those  which  should  leave 
things  to  take  their  course  as  if  gold  were  legally  invested 
with  that  attribute, — the  loans  of  the  State,  of  provinces, 
and  of  cities,  as  well  as  those  of  public  companies,  would, 
as  we  have  already  said,  be-  negotiated,  so  long  as  the 


134  CONSEQUENCES    OF    THE    FALL 

transition  lasted.,  on  harder  terms  than  they  had  been  pre- 
viously. 

But  there  are  grounds  for  apprehending  many  other 
difficulties,  political  or  administrative.  It  would  be  ne- 
cessary to  enlarge  the  budget,  for  wherever  the  State  ap- 
peared as  a  customer,  it  would  have  to  pay  dearer  than 
formerly.  It  would,  besides,  be  necessary  to  increase  the 
salaries  of  all  its  employes,  civil  and  military.  Even  to 
half  satisfy  only  the  just  demand  of  its  impoverished  func- 
tionaries, it  would  be  obliged  to  call  for  further  contribu- 
tions from  the  taxpayers,  for  how  numerous  in  certain 
countries,  in  France  for  example,  are  the  servants  of  the 
State  !  The  augmentation  of  the  budget,  assuming  it  to 
be  considerable,  means  an  aggravation  of  the  public  bur- 
dens, which  excites,  even  when  justifiable,  the  popular 
discontent,  just  in  proportion  to  the  degree  to  which  tax- 
ation is  increased.  I  believe  I  run  no  risk  of  contradiction, 
by  any  politician,  in  saying  that  a  government  which 
should  have  to  double  the  taxes  in  the  course  of  a  few 
years  would  thereby  incur  very  great  perils. 

Not  but  that  several  taxes  could  be  named,  and  some 
of  them  very  productive,  which,  in  the  event  of  a  fall  in 
gold,  would  yield  spontaneously  an  increased  revenue,  just 
in  proportion  to  the  fall  in  the  precious  metal.  The  du- 
ties which  adjust  themselves  to  the  value  of  the  articles 
taxed  are  of  this  number.  This  would  be  the  case  in 
France  with  the  registration  tax,  which  is  nearly  always  a 
percentage  on  the  amount  of  capital  employed  in  the 
transaction  subjected  to  the  tax.  It  is  the  same  with  the 
duties  on  beverages  sold  by  retail.  As  for  the  customs  du- 
ties, those  which  are  levied  ad  valorem,  would  afford  this 
natural  increase  ;  but  in  nearly  all  countries,  and  especially 
in  France,  they  are  the  exception.  But  such  imposts  as 
the  land  tax,  which  are  expressed  by  fixed  sums  of  money, 
would  have  to  be  augmented  by  law,  to  be  made  to  yield 


IN    THE    VALUE   OF    GOLD.  135 

to  the  treasury  a  revenue  of  equal  value.  Now,  is  the 
government  of  France  disposed  to  present  itself  before  the 
legislative  body  to  demand  the  doubling  of  the  land  tax, 
by  successive  additions  extending  over  ten  or  fifteen,  or 
even  twenty  years  ?  Does  it  believe  that  such  a  process 
would  benefit  it  much,  or  increase  its  popularity  ?  And 
yet  to  some  such  measure  as  this  would  it  have  to  resort. 

Thus  the  budget  would  be  subjected  to  a  perpetual 
revision,  both  in  its  expenditures  and  receipts.  Every 
three  or  four  years  it  would  be  necessary  to  re-arrange  the 
tariff  of  the  different  imposts  ;  and  to  fix  the  rate  of  all 
the  salaries,  from  the  pay  of  the  soldier  and  sailor,  or  that 
of  the  rural  policeman,  or  the  Custom-House  officer,  to 
the  income  of  the  prefect,  or  the  marshal  of  France,  the 
stipend  of  the  great  officers  of  State,  and,  in  all  conscience, 
the  civil  list  of  the  sovereign  himself.  It  would  also  be 
necessary  to  revise,  more  or  less  often,  the  scale  of  charges 
of  ministerial  officers  or  agents  of  every  kind,  lawyers,  bar- 
risters, registrars,  &c.,  a  class  of  persons  with  whom  there 
is  no  escaping  a  reckoning,  as  recent  experience  has  shown. 

A  similar  operation  would  be  necessary  with  the  tariffs 
of  charges  which  have  been  fixed  for  a  multitude  of  com- 
panies, such  as  those  of  railways,  canals,  docks,  and 
bridges.  In  some  cases  these  have  been  fixed  so  high, 
originally,  that  the  companies  have  not  found  it  necessary 
to  levy  the  full  rates.  Of  this  number,  however,  we  can 
hardly  specify  more  than  those  which  relate  to  the  freight 
traffic  on  the  railways  ;  beyond  that,  as,  for  instance,  for 
passenger  fares,  the  full  charge  allowed  by  law  is  (in 
France)  levied.  It  would  seem  to  me  only  consistent 
with  equity  that  the  fares  should  be  raised  from  the  mo- 
ment that  a  state  of  things,  so  unforeseen  and  so  uncon- 
trollable, arose  as  a  recognised  fall  in  the  value  of  the 
metal  of  which  money  was  made.  All  these  changes 
of  tariffs  would  be  a  labour  of  infinite  difficulty  for  gov- 


136  CONSEQUENCES    OF    THE    FALL 

ernment,  and  an  endless  source  of  discussions  with  the 
legislative  body. 

The  endowments  and  incomes  of  charitable  institu- 
tions, which  are  frequently  invested  in  the  public  funds, 
a  mode  of  investment  which  they  are  now  urged  to  adopt 
in  preference  to  all  others,  would  gradually  diminish  in 
value,  and,  to  maintain  them  on  their  original  scale,  it 
would  be  necessary  to  resort  for  assistance  to  the  State,  or 
to  the  localities. 

Optimists  will  tell  us  that  the  inconveniences  which 
have  been  here  indicated  as  the  consequence  of  an  increase 
of  the  budget  will  not  be  serious,  inasmuch  as  the  value 
of  the  pieces  of  money  having  fallen,  the  taxpayer  will 
not  find  himself  surcharged  if  he  be  only  called  upon  to 
pay  an  increased  number  of  pounds  sterling,  or  of  francs 
corresponding  simply  with  the  depreciation  of  the  metal. 
But  it  must  be  borne  in  mind  that  it  is  only  after  a  cer- 
tain lapse  of  time  that  the  public  at  large  will  have  fa- 
miliarised itself  with  the  idea  of  a  depreciation  of  the  cur- 
rency, and  will  have  become  reconciled  to  the  consequence 
in  the  form  of  an  increase  of  taxation.  If  the  rise  in 
every  description  of  property,  and  in  incomes  of  all  kinds, 
such  as  salaries,  fees,  &c.,  were  to  be  effected  uniformly, 
according  to  the  same  gradation,  the  public  intelligence 
would  soon  accommodate  itself  to  the  change  ;  but  mat- 
ters would  take  a  very  different  course.  It  is  in  the  very 
nature  of  things,  I  repeat,  that  such  an  event  as  the  fall 
in  gold  would  be  accomplished,  so  to  speak,  by  jerks,  and 
by  very  unequal  steps  as  respects  the  various  objects  af- 
fected. It  would  be  a  confused  state  of  things,  arising 
out  of  the  action  of  accidental  causes,  which  would  fre- 
quently and  unexpectedly  arise,  and  which  would  baffle 
all  control.  To  some  extent  it  would  be  a  justification  for 
the  instinctive  antipathy  which  the  people  feel  for  an  in- 


IN    THE    VALUE    OF    GOLD.  137 

crease  of  taxation,  and  supply  them  with  arguments  which 
in  their  minds  would  have  considerable  force. 

I  do  not  believe  I  exaggerate  in  saying  that  the  transi- 
tion period,  which  it  would  be  necessary  to  pass  over  be- 
fore the  fall  had  achieved  its  full  effect,  and  gold  had 
regained  a  somewhat  stable  value,  would  offer  features  of 
instability  and  discontent  characteristic  of  revolutionary 
epochs.  On  this  subject  I  shall  be  excused  if  I  here  quote 
an  observation  made  by  Mr.  Jacob,  in  his  work  on  the 
Precious  Metals,  when  describing  the  effects  of  the  rise 
of  prices  which  followed  the  discovery  of  the  mines  of 
America. 

"  There  is  some  ground  for  the  opinion,"  says  he, 
"  that  the  tendency  to  increased  expenditure  (caused  by 
this  rise  of  prices),  whilst  a  large  part  of  the  revenue  of 
the  crown  remained  stationary,  was  one  of  the  causes 
which  gave  rise  to  the  civil  war  under  Charles  I.,  the 
result  of  which  was  the  loss  of  that  unfortunate  prince's 
life."  * 


CHAPTER  III. 

ON  THE  GAIN  WHICH  WOULD  EESULT  TO  CEETAIN  CLASSES  OF 
PEESONS,  AND  TO  SOCIETY,  FEOM  THE  FALL  IN  GOLD.  THE  SAVING 
TO  THE  STATE  FEOM  THE  PAYMENT  OF  THE  DIVIDENDS  ON  THE 
PUBLIC  DEBT. 

WE  have  explained,  rapidly  and  incompletely,  the  de- 
plorable consequences  which  a  fall  in  the  value  of  gold 
would  entail.  It  is  right  to  examine  whether  this  revo- 
lution would  not  also  present  some  results  of  an  advan- 
tageous character.  There  is  one  very  easy  to  comprehend ; 
supposing  that  the  fall  of  gold  be  to  the  half  of  its  value, 

*  On  the  Precious  Metals,  Yol.  II.,  p.  103. 


138  CONSEQUENCES   OF   THE   FALL 

a  proportion  that  I  enounce  solely  by  way  of  example  and 
for  clearness  of  illustration,  it  will  follow  that,  at  the  end 
of  a  given  time,  the  raw  material  of  certain  articles  of 
luxury,  altogether  made  of  gold,  will  have  fallen  one-half. 
Then  we  shall  be  able  to  strike  our  gold  medals  at  a 
cheaper  rate  ;  the  gold  snuff-box  will  be  a  luxury  within 
the  reach  of  a  greater  number  of  purses  ;  and  our  Croesuses 
will  be  able  on  their  fete-days  to  adorn  their  sideboards  a 
little  more  easily*  with  cups  of  gold.  I  say  a  little  more, 
and  that  is  all ;  for  in  these  objects  the  art  and  design, 
which  form  a  considerable  part  of  the  price,  will  not  have 
fallen,  but  the  contrary  ;  the  fall  will  be  confined  to  the 
raw  material.  Still  clearer  is  it  that  gilding  will  not  ex- 
perience a  great  reduction,  for  it  is  not  the  weight  of  gold 
employed  in  it  that  constitutes  its  chief  expense.  I  see 
no  other  permanent  advantages  which  a  people,  free  from 
the  burden  of  a  heavy  national  debt,  can  hope  to  derive 
from  this  depreciation  of  gold,  after  the  epoch  when  the 
crisis  of  the  transition  shall  have  passed.  The  advantage 
is  not  great,  it  must  be  confessed.  There  are  few  articles 
in  which  a  fall  to  the  same  extent  would  not  be  a  greater 
benefit.  What  a  contrast,  for  example,  with  the  service 
that  would  be  rendered  to  all  classes  of  society  by  a  re- 
duction of  one-half  in  the  value  of  coal  or  iron,  or  even  of 
copper  or  lead  !  I  do  not  speak  of  bread  or  meat,  in 
which  a  reduction  of  price  to  the  same  extent  would  pro- 
duce incalculable  effects. 

Independently  of  the  facilities  which  the  fall  in  the 
value  of  gold  would  afford  for  procuring  plate  and  articles 
of  luxury,  into  the  composition  of  which  this  metal  enters, 
a  certain  compensation  must  be  noticed,  which  would  not 
be  unimportant.  Having  indicated  the  classes  which 
would  suffer  from  the  fall  of  gold,  it  must  be  added  that 
there  would  be  gainers  as  well  as  losers.  If  the  creditor 
be  obliged  to  give  a  discharge,  on  receiving  a  value  smaller 


IN    THE    VALUE    OF    GOLD,  139 

than  that  for  which  he  believed  himself  assured, — if,  for 
example,  the  100  pounds  sterling  paid  to  him  represent 
only  the  enjoyments  which  he  would  have  previously  pro- 
cured for  fifty,  he  is  assuredly  a  loser  ;  but  the  debtor 
benefits  to  the  same  extent.  The  100  pounds  sterling 
which  he  will  have  repaid,  will  have  been  procured  with 
one-half  less  labour  or  privations.  Against  the  majority 
of  the  losses  which  we  have  enumerated,  there  will,  then, 
be  a  set-off  of  gain  of  the  same  importance.  On  this 
point  two  questions  arise,  which  deserve  our  attention  : 
the  one  is  whether  for  society,  taken  in  its  mass,  there  is 
compensation  ;  and  the  other,  whether  equity  sanctions 
the  loss  which  the  one  suffers,  and  the  gain  which  the 
other  acquires. 

On  the  first  subject,  I  shall  only  add  a  word  to  the 
remarks  I  have  already  submitted  to  the  reader.  Changes 
which  affect  deeply,  and  suddenly,  or  in  a  brief  interval, 
a  very  great  mass  of  interests,  are  nearly  always  to  be 
regretted,  even  when  at  the  same  time,  and  by  the  same 
act,  a  considerable  number  of  persons  find  themselves  de- 
riving advantages.  It  is  for  society  a  perilous  trial,  es- 
pecially when  the  working  population  find  themselves 
among  the  number  of  the  suffering  classes  ;  it  is,  in  fact, 
they  to  whom  patience  is  most  difficult,  since  they  possess 
the  fewest  resources.  Society  would,  under  these  circum- 
stances, have  to  pass  through  an  ordeal,  which,  I  think, 
I  have  justly  characterised  as  revolutionary.  If  the  qual- 
ification be  just,  it  enables  us  to  appreciate  all  the  dan- 
gers of  the  transition.  With  skilfulness,  and  in  a  season 
of  tranquillity,  a  people  may  pass  without  disaster  through 
such  a  trial ;  but  it  requires  also  good  fortune.  Now, 
can  any  one,  without  presumption,  flatter  himself  that 
he  will  possess  at  any  one  moment,  and  enjoy  during  a 
succession  of  years,  these  three  gifts  of  heaven — tran- 
quillity, skill,  and  good  fortune  ? 


140  CONSEQUENCES    OF    THE   FALL 

Let  us  rather  insist  on  the  second  question,  that  of 
equity.  It  is  not  without  its  bearings  on  the  first ;  for 
when  events  are  in  conformity  with  right,  it  is  in  human 
nature  generally  to  resign  itself  to  them.  On  the  con- 
trary, indignation  and  resentment  easily  take  possession 
of  a  man  when  he  feels  that  justice  is  violated  in  his  per- 
son. 

Among  the  results  which  may  be  expected  to  arise 
from  the  fall  of  gold  in  those  countries  where  this  metal 
forms  the  sole  or  the  dominant  currency,  I  will  recur  to 
one  of  the  most  important  for  the  purpose  of  examining 
it  from  an  equitable  point  of  view  ;  I  return  to  the  case 
of  a  proprietor  of  government  stock.  Let  us  suppose  the 
case  of  an  inhabitant  of  London,  living  on  an  income  of 
£1,000  a  year  from  Consols.  During  and  after  the  depre- 
ciation of  gold,  as  well  as  before,  he  will  receive  his  1,000 
discs  of  metal,  containing,  altogether,  7  kilogrammes  and 
318  grammes  of  fine  gold  ;  but  with  this  sum  he  will 
have  only  the  half  of  the  enjoyments  which  he  possessed 
previously.  Is  there  or  is  there  not  in  such  a  diminution 
of  subsistence  anything  which  can  be  taxed  with  spolia- 
tion ?  I  do  not  think  there  is,  in  the  case  of  England. 
For  what  is  the  engagement  into  which  that  State  has 
entered  ?  By  the  very  fact  that  England  has  a  gold 
standard,  the  creditor  to  whom  the  British  government 
owes  a  pound  sterling  can  claim  no  more  than  the  quan- 
tity of  gold,  to  which  the  law,  once  for  all,  has  attached 
the  denomination  of  a  pound,  that  is  to  say,  7  grammes, 
318  milligrammes.  The  State  is  bound  to  furnish  to 
the  creditor  for  a  pound  this  quantity  of  metal ;  it  has, 
strictly,  no  other  obligation.  If  in  paying  the  British 
creditor  in  former  times,  when  the  value  of  gold  rose  in 
proportion  to  other  commodities,  the  government  had  at- 
tempted to  deduct  from  the  dividend  2  or  3  per  cent,  or 
more,  it  would  have  been  denounced  as  an  act  of  spolia- 


IN    THE    YALUE    OF    GOLD.  141 

tion.  In  the  possible  case  that  the  mines  of  Australia, 
California,  and  Northern  Kussia  had  remained  undiscov- 
ered till  half  a  century  later,  and  that  the  productiveness 
of  the  old  mines  had  diminished,  the  English  government 
would  not  have  been  justified  in  reducing  the  amount  of 
interest,  and  paying  only  three-fourths  or  two-thirds  of  a 
sovereign  instead  of  a  whole  one,  under  pretext  that  gold 
had  risen  in  proportion.  The  law  is  the  same  for  the 
debtors  as  the  creditors.  The  latter  have  no  claim  beyond 
the  quantity  of  gold  which  has  been  agreed  upon  as  form- 
ing the  pound  sterling,  if  gold,  instead  of  rising,  should 
fall  in  value.  The  two  parties  have  run  the  risk  of  a  va- 
riation in  the  value  of  gold  ;  and  to  whichever  side  the 
chance  turns  there  is  a  legitimate  profit.  Thus,  for  Eng- 
land, which  has  the  gold  standard,  strict  equity  is  not 
violated  by  the  change,  unlucky  though  he  be  who  may 
prove  to  be  the  creditor  of  the  State.  There  remains, 
however,  a  question  of  social  and  political  propriety  on 
which  we  shall  afterwards  offer  some  observations. 

Would  the  case  of  France  be  similar  to  that  of  Eng- 
land ?  Would  the  former  State,  by  the  letter  of  the  law, 
or  in  equity,  be  warranted  in  profiting  by  the  fall  of  gold, 
and  paying  its  debts  in  a  cheapened  currency  ?  Can  it 
take  advantage  of  the  circumstance,  that  the  29  centi- 
grammes of  gold  which  in  the  year  11  were  equal  to  4J- 
grammes  of  fine  silver,  constituting  the/rawc,  appear  now 
for  the  moment  to  be  of  much  less  value,  to  pay  its  credi- 
tors in  gold  ?  This  is  a  question  of  good  faith,  the  solu- 
tion of  which,  after  the  statements  already  submitted, 
ought  not  to  be  very  difficult.  It  would  be  a  violation  of 
justice,  because  France  has  a  silver  standard.  In  the 
French  currency,  silver,  according  to  the  preamble  to  the 
law  of  the  year  11,  is  the  fixed  point,  and  this  fixed  point 
is  the  guarantee  of  the  equity  and  honesty  of  transactions, 
the  security  for  the  preservation  of  property.  Nor  is  it 


142  CONSEQUENCES    OF    THE    FALL 

possible  to  swerve  from  this  fixed  point,  without  wanting 
in  probity,  the  rules  of  which  States  are  bound,  even 
more  than  individuals,  to  observe. 

If  silver  had  fallen  in  value,  the  French  government 
would  have  been  justified  in  paying  its  creditors  in  silver 
as  before.  It  is  in  silver  that  the  agreement  has  been 
made.  The  law  has  declared,  once  for  all,  that  4J 
grammes  of  fine  silver  shall  make  a  franc,  neither  more 
nor  less.  Thus,  as  was  declared  by  Gaudin,  in  a  passage 
which  I  have  already  quoted  more  than  once  : — "  He  who 
shall  lend  200  francs  can  at  no  future  time  be  repaid  with 
less  than  a  kilogramme  of  silver,*  which  shall  always  be 
worth  200  francs,  and  never  be  worth  more  or  less." 

Nobody  can  say  that  some  day  silver  may  not  also 
undergo  a  great  fall,  brought  about  by  a  production  which 
should  be  distinguished  by  the  two  following  character- 
istics :  of  being  much  greater  in  comparison  with  the  em- 
ployments to  which  it  had  hitherto  been  applied,  and  of 
being  produced  under  more  favourable  circumstances, 
that  is,  at  less  cost  per  kilogramme  for  the  metal  obtained. 
There  are  strong  reasons  for  thinking  that  if  the  United 
States  annexed  Mexico,  and  penetrated  further  into  the 
regions  of  Central  America,  this  event  would  not  be  of 
tardy  accomplishment,  under  the  auspices  of  a  race  so  in- 
dustrious and  so  enterprising  as  the  Anglo-Saxons.f 

It  may  be  doubted,  however,  whether,  unless  under 
circumstances  of  a  most  extraordinary  character,  the 
change  in  the  case  of  silver  could  be  so  sudden  as  it  has 
been  in  that  of  gold.  The  nature  of  the  argentiferous  de- 
posits, the  obstacles  they  offer  to  the  miners,  and  the 
complicated  processes  by  which  the  metal  is  abstracted 
from  the  ore,  combine  to  reject  the  hypothesis  of  a  rapid 

*  Of  the  standard  of  nine-tenths  fineness. 

f  I  have  alluded  to  this  subject  in  the  third  volume  of  my  Political 
Economy,  Section  III.,  Chapters  I.  and  II. 


IN    THE    VALUE    OF    GOLD.  143 

change  in  the  value  of  silver.  Nevertheless,  a  fall  in 
silver  is  an  event  to  be  anticipated,  an  event  even  proba- 
ble at  no  very  distant  date,  and  it  offers  to  the  French 
government  a  chance,  and  the  only  one,  of  profiting  le- 
gally at  the  expense  of  its  creditors. 

Owing  to  the  discovery  of  the  new  gold  mines,  (if 
those  mines  should  continue  to  be  what  they  have  been  up 
to  the  present  day,)  a  time  will  come  when  a  change  will 
come  over  the  British  treasury,  as  if  some  genii,  an  enemy 
of  its  creditors,  had  spirited  away  their  dividend  warrants, 
and  substituted  others  of  only  half  their  value.  Not  that 
the  number  of  pounds  sterling  due  to  them  as  principal, 
and  of  which  the  interest  is  counted  to  them  every  six 
months,  will  be  diminished  ;  not  that  the  quantity  of  gold 
contained  in  the  pound  sterling  will  be  lessened  ;  but  the 
British  treasury  will  henceforth  draw  from  the  taxpayers' 
each  pound  sterling,  with  as  little  difficulty  to  them,  as  it 
previously  took  to  pay  a  half  sovereign  ;  and  the  unlucky 
fundowners  will  obtain  for  the  pound  only  half  of  the  en- 
joyments which  it  now  procures  for  them  ;  and  yet,  in 
strict  right,  they  will  have  no  reason  to  complain.  As  for 
the  French  treasury,  it  will  have  no  right,  unless  by  a  fla- 
grant iniquity,  to  expect  any  similar  profit  from  the  dis- 
covery of  the  new  gold  mines. 


SECTION  VII, 

OF  THE  MEASURES  TO  BE  TAKEN  TO  AVERT  THE 
EVIL  EFFECTS  OF  THE  FALL  OF  GOLD. 


CHAPTER  1. 

CASE  OF  A  STATE  LIKE  ENGLAND,  WHERE  GOLD  IS  THE  STANDARD, 
AND  WHERE  THERE  IS  NO  OTHER  MONEY  BUT  GOLD. 

SUCH,  then,  is  the  perspective  which  presents  itself  to  the 
inhabitants  of  a  certain  number  of  States,  and  particu- 
larly of  France  and  England.  Simultaneously  with  the 
fall  of  gold,  there  will  be  a  period  of  great  suffering  for  a 
very  large  number  of  interests  worthy  of  consideration  and 
sympathy,  a  period  full  of  danger  to  the  tranquillity  even 
of  States,  and  to  the  regular  progress  of  society.  In  Eng- 
land, an  inflexible  law  seems  to  warrant  these  hardships 
and  sufferings.  In  France,  which  is  threatened  with  the 
same  danger,  we  find  a  legislation  which  was  matured  half 
a  century  ago,  an  intelligent,  honest  legislation,  in  the 
name  of  which  the  aggrieved  interests  might  loudly  pro- 
test, and  declare  that  in  them  a  sacred  right  had  been  de- 
nied and  violated.  In  these  circumstances  what  ought  to 
be  done  ? 

In  the  countries  where  gold  is  the  monetary  standard, 


TO  AVERT  THE  EFFECTS  OF  THE  FALL  OF  GOLD.       145 

as  in  England,  it  is  not  easy  to  indicate  what  should  be 
done  ;  it  may  even  be  contended  that  there  is  no  ground 
for  doing  anything.  Yet,  even  in  England,  some  persons 
have  put  forth  the  advice  that  the  standard  should  be  al- 
tered, and  that  silver  should  be  substituted  for  gold. 
They  ground  their  opinion  primarily  upen  the  plea  of 
principle,  in  maintaining  that  gold  having  ceased  for  an 
interval  of  time,  which  may  possibly  be  rather  long,  to 
satisfy  the  essential  condition  of  having  a  value  relatively 
stable,  it  thereby  loses  its  aptitude  for  the  functions  of 
money. 

A  change  in  the  standard  is  a  serious  act,  to  which  we 
have  no  right  to  resort  till  after  the  gravest  deliberation, 
and  until  we  are  well  assured  that  we  have  reason  and  jus- 
tice on  our  side,  as  well  as  the  highest  and  most  legitimate 
public  interests.  Still,  the  substitution  of  one  precious 
metal  for  another,  for  the  important  attribute  of  a 
standard,  would  be  far  more  easy  to  justify  in  the  case  of 
abandoning  the  metal  which  was  threatened  with  or  had 
already  experienced  a  gradual  fall,  than  if  it  were  propos- 
ed, as  has  been  done  by  some  persons  in  France,  to  divest 
of  the  quality  of  the  standard  a  metal  which  preserves  a 
relatively  stable  value,  to  bestow  it  upon  another,  the 
value  of  which  is  undergoing  a  fall.  Still,  a  change  of 
standard,  even  under  the  circumstances  in  which  gold 
would  be  replaced  by  silver,  in  England,  at  the  present 
time,  would  be  open  to  very  serious  objections.  Debtors 
of  every  kind,  to  whom  this  substitution  would  necessarily 
be  prejudicial,  would  say,  not  without  justice,  that  if  it  be 
true  that  in  the  present  state  of  the  law,  as  regards  the 
standard,  a  fall  in  the  value  of  gold  must  turn  to  their  ad- 
vantage, it  is  equally  true  that  a  rise,  if  it  had  taken 
place,  would  have  been  to  their  detriment,  and  to  the  ben- 
efit of  their  creditors  :  if  fate  has  decided  in  their  favour, 
it  is  for  their  creditors  to  submit,  as  they  should  them- 
10 


146  TO    AVERT    THE    EVIL    EFFECTS 

selves  have  done  in  the  opposite  event  :  and,  they  might 
add,  have  not  there  been  periods  in  the  modern  history  of 
England  when  the  debtor  has  had  to  suffer  from  the  rise 
in  gold,  either  by  comparison  with  its  past  value,  or  by 
comparison  with  the  paper  money  which  he,  the  debtor, 
had  received  when  he  borrowed  in  the  period  from  1797  to 
1821,  and  which  he  has  since  the  latter  date  had  to  repay 
in  gold  ?  And  has  not  this  been  attended  with  precisely 
the  same  result  as  if  the  theory  of  a  rise  in  the  precious 
metals  had  been  realised  ?  If,  in  these  circumstances, 
they  had  demanded  a  change  in  the  monetary  system  of 
the  country,  they  would  certainly  not  have  been  successful. 
By  the  same  reason,  may  they  say,  there  would  be  no 
ground  now  for  entertaining  the  remonstrances  which  the 
creditor  might  offer  on  the  occasion  of  a  depreciation  in 
gold. 

An  argument  which,  in  the  eyes  of  the  public  author- 
ities of  England,  will  weigh  with  great  force,  and  incline 
the  balance  towards  the  maintenance  of  the  present  stand- 
ard, is  furnished  by  the  enormous  amount  of  the  public 
debt,  the  annual  interest  of  which  amounts  to  about  28 
millions  sterling,  or  700  millions  of  francs.  It  is  a  burden 
which,  whilst  it  remained  nominally  the  same,  would,  in 
fact,  be  alleviated  to  the  extent  of  one  half  to  the  tax- 
payer, provided  that  the  present  standard  were  preserved 
whilst  the  value  of  gold  had  fallen  in  the  above  proportion  ; 
and,  in  effect,  when  once  the  fall  in  the  metal  was  accom- 
plished, it  would  be  as  easy,  on  this  assumption,  to  pay 
two  pounds  sterling  of  taxes  as  one  pound  at  the  present 
time.  A  less  decided  reduction  of  the  heavy  burden  of 
the  national  debt,  would,  in  all  probability,  be  a  powerful 
argument  with  such  an  assembly  as  the  parliament,  which 
leans  naturally  in  the  direction  where  relief  may  be  had 
for  the  contributors  to  the  revenue,  and  which  in  the  pres- 


OF   THE    FALL    OF    GOLD.  147 

ent  case  would  have  powerful  reasons  for  justifying  such  a 
course. 

With  regard,  however,  to  this  advantage,  which    it 
would  be  warranted  in  strict  right  to  claim  for  the  tax- 
payer, parliament  ought  to  weigh  the  mass  of  inconveni- 
ences, and  even  of  perils,  which  must  necessarily  result 
from  the  maintenance  of  a  currency  in  a  decided  course  of 
depreciation.     I  have   indicated  what   are   the    changes 
which  a  fall  in  the  metal,  of  which  money  is  made,  might 
occasion  to  a  multitude  of  interests.     It  ought,  I  think,  to 
be  enough  to  kindle  the  emotions  of  even  a  statesman 
possessed  of  the  firmness  which  distinguishes  peculiarly 
the   governments   and  people  of  England.     But  yet,   it 
would  be  easy  to  add  to   the  generalities  which  I  have 
already  presented,  other  facts  springing  from  the   social 
life  and  habits  of  England.     The  part  performed  by  the 
British  funds  is  very  extended.     Consols  are  the  invest- 
ment of  a  mass  of  capitals  which  are  worthy  of  the  par- 
ticular solicitude  of  the  legislator.     The  funds,  which  are 
held  by  trustees,  or  under  the  guardianship  of  the  Court 
of  Chancery,  and  which  constitute  the  fortune  of  a  multi- 
tude of  minors,  are  all  placed  in  the  public  funds,  or  on 
mortgage,  which  amounts  to  the  same  thing  ;   I  mean, 
runs  the  same  risk.     The  endowments  of  a  multitude  of 
churches,  schools,  hospitals,  and  valuable  institutions  of 
all  kinds,  are  also  invested  in  the  public  funds.     In  a 
great  number  of  cases,  the  fortunes  which  a  father  leaves 
to  his  younger  children  are  represented  by  sums  of  money 
charged  upon  his  estate,  the  interest  of  which  the  oldest 
son  discharges.     The  number  of  persons  who  live  upon 
life-incomes,  or  who  have  already  made  payments  with  a 
view  of  some  day  securing  one,  is  very  considerable  in 
England.     Life  assurance,  with  a  view  of  securing  to  a 
person  a  certain  income  in  case  of  such  or  such  an  event- 
uality, is  practised  by  the  English  to  an  extent  of  which 


148  MEASURES   TO   AVERT   THE    EVIL    EFFECTS 

we  have  no  idea  in  France.  The  consequence  is, 
however,  clear.  Under  these  various  forms,  and  even 
under  others,  myriads  of  existences  would  be  troubled  ; 
the  very  foundation  of  property  would  be  assailed  in  the 
mode  of  its  partition  among  children  ;  habits  worthy  of 
encouragement,  such  as  assurances  of  lives,  with  their 
multiplied  combinations,  would  be  destroyed.  The  cus- 
tom of  making  investments  in  the  public  funds,  which  is 
eminently  favourable  to  the  credit  of  the  State,  and  at 
the  same  time  tends  to  perpetuate  prudence  among  the 
people,  would  be  deprived,  during  a  considerable  lapse  of 
time,  of  the  advantage  which  it  now  offers  of  guarantee- 
ing for  the  future  a  certain  degree  of  comfort, — thus 
necessarily  weakening,  if  it  did  not  destroy,  this  motive 
to  accumulate.  Taking  into  account  the  whole  of  these 
circumstances,  and  the  discouragement  which  would  be 
thrown  upon  habits  which  are  so  favourable  to  society, 
and  even  to  the  British  treasury,  there  is  enough  to  make 
parliament  pause  even  when  in  presence  of  the  temptation 
which  an  effective  reduction  of  the  public  debt  could  not 
fail  to  exercise.* 


CHAPTER  II. 

CASE  OF  A  STATE  SUCH  AS  FEANCE,   WHEEE   THEEE  IS  A  SILVEE 
STANDAED,   BUT  ALSO  A  GOLD   CUEEENCY. 

IN  States,  like  France,  where  the  law  acknowledges  only 
a  silver  standard,  and  where  of  right  gold  fills  in  the 
monetary  system  but  a  subordinate  rank,  the  remedy  of 
the  evil  is,  in  a  great  measure  at  least,  less  difficult  to 
discover,  and  the  legislators,  in  corning  to  a  decision. 

*  These  considerations,  among  others,  are  presented  with  great  force  by 
Mr.  James  Maclaren,  in  the  work  which  I  have  already  cited. 


OF    THE    FALL    OF    GOLD.  149 

would  have  fewer  perplexities  to  surmount  than  in  the 
case  of  England.  It  would  suffice  if  we  were  to  put  an 
end  to  the  toleration,  contrary  evidently  to  the  spirit  of 
our  laws  upon  the  matter,  in  virtue  of  which  gold  will 
continue  indefinitely,  unless  provided  against,  to  take  its 
place  in  the  circulation  on  the  same  conditions  as  if  it 
always  preserved,  in  comparison  with  silver,  the  same 
value  that  it  had  done  half  a  century  ago. 

In  the  system  of  French  legislation,  if  gold  instead  of 
being  worth,  as  in  the  year  11,  15^  times  its  weight  in 
silver,  were  only  worth  the  half,  that  is,  7f  times,  it  would 
be  necessary  to  take  such  measures  with  regard  to  the 
currency,  that  that  which  should  be  a  franc  in  gold,  that 
is  to  say,  the  legal  equivalent  of  the  piece  of  5  grammes 
of  silver,  of  nine-tenths  fineness,  should  comprise  58  centi- 
grammes of  the  precious  metal.  Such  is  the  spirit  and 
even  the  text  of  the  law.  It  would  be  necessary  to  sub- 
ject the  gold  coinage  to  an  analogous  change,  should  gold, 
instead  of  falling  one-half,  only  fall  to  ten  times  the  value 
of  silver,  or  to  twelve,  or  fourteen,  or  even  to  fifteen  times. 
Now,  by  what  mode  is  this  transformation  to  be  arrived 
at  ?  Would  it  be  by  recoining  the  pieces  of  10,  20,  or 
40  francs,  so  as  to  just  double  the  fine  metal  which  they 
contain,  on  the  hypothesis  of  a  fall  of  one-half? 

So  understood,  the  process  of  recoining  would  encoun- 
ter, in  its  execution,  a  difficulty  which  appears  to  me  in- 
surmountable :  to  have  always  coins  of  a  fixed  value,  of 
20  francs  for  instance,  it  would  be  necessary  to  repeat, 
indefinitely,  the  process  of  melting;  it  would  have  to  be 
resorted  to  whenever  gold  declined  3  or  4  per  cent,  in 
comparison  with  silver,  or,  more  properly  speaking,  at  even 
shorter  intervals.*  Gold  coins  would  have  hardly  left  the 

*  I  remember  that  a  change  of  one  and  a  half  per  cent,  in  favour  of  gold, 
about  30  or  40  years  ago,  caused  it  to  disappear  entirely  from  commercial 
payments. 


150  MEASURES    TO    AVEET    THE    EVIL    EFFECTS 

scales  before  it  would  be  necessary  to  return  them  there 
again.  Such  a  fluctuation  in  the  intrinsic  value  of  a  gold 
coinage  is  repugnant  to  common  sense,  and  is  absolutely 
inadmissible.  Such  a  process  of  remelting  may  have  been 
tolerated  when  a  slight  variation  in  the  value  of  gold  was 
foreseen,  and  also  on  the  supposition — not  a  very  probable 
one — that  the  period  of  the  disturbance  would  only  last, 
so  to  say,  for  a  moment,  and  be  followed  immediately  by 
an  almost  mathematical  stability.  From  the  moment 
that  there  is  a  prospect  of  a  considerable  variation,  which, 
from  its  very  magnitude,  cannot  be  completed  until  after 
a  considerable  lapse  of  time,  and  which  seems  likely  to  be 
attended  with  many  fluctuations,  this  expedient  becomes 
impracticable,  nay,  let  me  say,  chimerical. 

It  would  be  better  to  recoin  the  gold  once  for  all,  and 
adapt  it  to  another  system,  by  giving  the  coins  a  fixed 
weight,  in  relation,  simply,  with  the  base  of  the  metrical 
system,  instead  of  always  trying  to  bring  them,  by  altera- 
tions of  weight,  to  a  fixed  value,  such  as  40  francs,  20 
francs,  or  10  francs.  Pieces  of  gold  might  be  coined  of  5 
grammes  or  of  10  grammes,  like  the  piece  of  one  franc  in 
silver,  which  weighs  just  5  grammes,  and  the  piece  of  two 
francs,  which  weighs  ten.  It  would  be  to  revert  to  the 
plan  which  was  recommended  by  Mirabeau,  by  the  old 
authorities  of  the  mint,  by  the  Institute  as  a  body,  which 
was  adopted  by  the  legislature  in  the  year  3,  and  to  which, 
in  the  year  6,  it  gave  a  renewed  proof  of  its  adhesion.* 
It  is,  also,  the  idea  which  was  recommended  by  the  sec- 
tion of  finance  in  the  Council  of  State  during  the  discus- 
sions of  the  year  11.  The  value  of  these  pieces,  that  is 
to  say,  the  number  of  francs  and  fractions  of  francs  which 
they  would  be  worth,  would  vary  according  to  the  mar- 
ket value  of  gold  in  comparison  with  silver.  To  save  in- 

*  See  Section  IV.,  Chapter  III.,  for  what  passed  on  the  occasion  in  the 
two  legislative  councils. 


OF    THE    FALL    OF    GOLD.  151 

dividuals  from  the  annoyance  of  bargaining  over  each  pay- 
ment, this  value  might  be  fixed  every  six  or  twelve 
months,  by  an  official  regulation  which  should  give,  for 
the  basis  of  the  value  of  the  gold  coinage,  the  market 
value  of  this  metal,  in  comparison  with  gold  on  the  prin- 
cipal exchanges  of  Europe,  such  as  London,  Paris,  Ham- 
burg, or  even  the  average  of  the  exchange  between  these 
different  States  having  different  metals  for  their  standards. 
This  would  be  to  adopt  the  first  idea  of  Prieur,  and  the 
Committee  of  the  Five  Hundred,  perfected  by  Cretet  and 
the  Committee  of  the  Ancients. 

Nevertheless,  it  is  a  question  for  consideration,  whether 
the  payments  from  individual  to  individual,  to  which  this 
legal  quotation  of  gold  applies,  should  not  be  limited  to 
a  certain  maximum,  such  as,  for  instance,  the  sum  of 
1,000  francs  (£40),  and  whether  for  larger  sums  the 
transactions  of  individuals  ought  not  to  be  left  to  the  con- 
tract of  the  parties. 

The  arrangement  which  I  have  just  indicated,  I  mean 
the  recoining  of  the  gold  currency  into  new  pieces,  con- 
taining a  round  number  of  grammes,  is  of  all  plans  the 
most  philosophical,  and  the  most  in  conformity  with  the 
best  established  views  respecting  the  currency :  habit 
would  soon  easily  accommodate  itself  to  it,  and  it  is  that 
which  gives  to  the  future  the  surest  guarantees  against 
such  monetary  derangements  as  we  are  now  undergoing. 
The  only  fault  to  be  alleged  against  it,  is  the  necessity  not 
only  for  a  general  but  an  immediate  recoinage.  With  a 
little  reflection,  however,  it  will  be  found  that  the  incon- 
venience is  not  serious,  for  it  will  be  very  easy,  and  at  lit- 
tle expense,  to  melt  and  recoin  one  or  two  milliards  (£40,- 
000,000  or  £80,000,000),  and  the  circulation  of  France 
restored  to  its  normal  state,  will  not  require  two  milliards 
of  gold,  alongside  of  the  silver  money  and  bank  notes.* 

*  The  cost  would  be  6  francs,  70  centimes  (7s.  lid.)  for  a  kilogramme  of 


152  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

Another  and  more  simple  expedient  might  be  adopted, 
provisionally,  until  the  new  coinage  was  determined  upon, 
and  which  would  change  the  state  of  things  instantly  and 
without  expense.  A  law  might  be  passed  declaring  that 
henceforth  the  piece  of  20  francs  shall  only  be  worth  19, 
or  19  francs,  50  centimes  ;  afterwards,  when  the  fall  of 
metal  shall  have  been  more  decided,  a  new  law  might  pro- 
nounce it  to  be  worth  18  francs,  50  centimes,  or  IS  francs, 
and  so  on.  This  is  what  was  done  in  Kussia,  where  the 
edict  of  1810,  which  offers  a  great  analogy  to  the  French 
law  of  Germinal,  year  11,  had  ordered  the  fabrication  of 
imperials  and  half  imperials,  in  gold,  of  10  and  5  roubles, 
the  rouble  being  a  silver  coin  serving  for  the  monetary 
unit.  In  consequence,  many  pieces  of  gold  of  5  roubles 
have  been  struck,  bearing  the  inscription  in  letters,  of  five 
roubles,  as  our  Napoleons  bear  that  of  twenty  francs. 
The  edict  of  the  1st  (13)  July,  1839,  which  is  the  com- 
plement of  that  of  1810,  finding  the  relation  of  the  metals 
a  little  altered,  gold  having  risen  in  value  in  Kussia  and 
throughout  the  world,  enacted  that  henceforth  the  half 
imperials,  called  pieces  of  5  roubles,  should  pass  for  5 
roubles  and  15  copeks,  which  was  found  to  work  very  well, 
notwithstanding  the  name  of  Jive  roubles  inscribed  on 
these  coins.  I  do  not  see  why  the  same  process  should 
not  be  resorted  to  in  France,  and  in  the  countries  where 
the  monetary  legislation  is  the  same  ;  only  in  an  inverse 
way  to  that  which  was  practised  in  1839  ;  for  gold  having 
now  fallen  in  value  instead  of  rising,  it  should  not  be  by 
an  addition  being  made  to  the  value  of  the  gold  coins,  but 
by  subjecting  them  to  a  deduction,  and  this  deduction 
might  be  more  decided  at  a  later  period,  when  occasion 

coined  gold,  that  is  of  the  fineness  of  nine-tenths,  making  at  present  3,100 
francs  (£129.  3s.)  For  325,000  kilogrammes  of  gold,  which  would  make 
more  than  a  milliard  (£40,000,000),  it  would  be  2,177, 300  francs ;  thus  for 
2  milliards  it  would  be  a  little  more  than  4  millions  (£160,000). 


OF    THE    FALL    OF    GOLD.  153 

arose, — which  would  be  seen  by  a  comparison  of  the  mar- 
ket value  of  the  two  metals. 

In  the  same  way  in  Spain,  where  a  succession  of  edicts 
changed  the  relations  between  the  quadruple  of  gold,  and 
the  silver  dollar,  in  conformity  with  the  variations  which 
these  two  metals  had  undergone  in  their  respective  values. 
One  of  these  edicts  is  dated  July  17,  177&  There  is, 
however,  this  difference,,  that  in  Spain  the  quadruple  did 
not  bear  an  inscription  declaring  it  to  be  equivalent  to  such 
or  such  a  number  of  dollars,  the  same  as  under  the  an- 
cient regime  ;  in  France  the  gold  coins,  the  louis  and  the 
double-louiSj  did  not  bear  an  inscription  which  said  that 
they  were  worth  24  and  48  livres.  The  law  assigned  to 
them  this  value  in  relation  to  silver  coins,  which  were 
either  the  livre  or  the  multiples  of  the  livre;  but  the  law 
could  be  modified  in  this  respect  without  leaving  the  in- 
scription on  the  gold  coins  in  contradiction  with  the  new 
value  which  had  been  given  them. 

In  a  State  where  the  currency  is  regulated  by  laws 
such  as  those  which  subsist  in  France,  this  inscription  of 
the  words  forty  francs,  twenty  francs,  or  ten  francs,  on 
the  gold  coins,  or  any  similar  inscription  which  might  be 
used  in  another  country,  where,  moreover,  the  law  should 
have  laid  down  the  principle  of  a  silver  standard,  is  not 
of  a  nature  to  prevent  the  legislator  from  assigning  to  the 
existing  gold  coins  a  successively  diminished  value,  and 
conformably  at  each  instant  to  the  relation  between  the 
value  of  gold  and  that  of  silver. 

So  far  as  I  understand  the  monetary  legislation  of  the 
Empire  of  Kussia,  the  government  of  the  Czar  was  per- 
fectly warranted  in  altering  the  value  of  the  gold  imperial 
in  roubles,  in  the  manner  I  have  just  indicated.  In  the 
same  way  with  France,  in  virtue  of  her  monetary  constitu- 
tion, the  government  would  be  doing  nothing  which  was 
not  in  conformity  with  reason  and  justice  in  modifying  the 


154  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

value  in  francs  of  her  gold  coins,  of,  say,  10,  20,  and  40 
francs,  conformably  with  the  variations  in  the  value  of 
gold  in  relation  to  silver,  which  is  the  metal  of  her  mone- 
tary unit.  What  is,  in  fact,  the  meaning  of  the  words 
ten  francs,  twenty  francs,  or  forty  francs  stamped  upon 
our  pieces  of  gold  ?  Do  they  mean  that  these  coins  shall 
he  necessarily,  and  forever  taken  for  the  sum  of  10,  or  of 
20,  or  of  40  francs  ?  Assuredly  not,  for  this  interpreta- 
tion would  be  contrary  to  the  spirit  and  letter  of  the  law. 
It  would,  in  fact,  be  to  say,  that  gold,  as  well  as  silver,  is 
the  standard.  The  quality  of  standard  implies  immuta- 
bility of  value  ;  it  reveals  itself  only  by  this  immutability, 
and  the  immutability  in  its  turn  implies  the  quality  of 
standard.  The  words  inscribed  on  the  gold  coins  struck 
since  7th  Germinal,  year  11,  have  only  a  restricted  and 
provisional  meaning, — they  express  a  material  fact,  name- 
ly, that  at  the  moment  when  these  pieces  have  been  coin- 
ed, the  relation  between  the  two  metals  was  such  that  the 
weight  of  gold  contained  in  the  coins  called  10,  20,  or  40 
francs  is  the  equivalent  of  10,  20,  or  4:0  francs,  that  is  to 
say  of  10,  20,  and  40  times  5  grammes  of  silver  of  nine- 
tenths  fineness,  or  that,  if  there  is  a  difference,  it  is  so 
slight  that  in  small  transactions,  it  is  not  worth  notice.  I 
say  small  transactions,  for  under  the  regime  of  the  law  of  the 
7th  Germinal,  year  11,  gold  ceased  to  figure  in  operations 
a  little  considerable,  since  it  acquired  an  appreciable  pre- 
mium. People  carried  their  gold  to  the  money-changer, 
in  order  to  pocket  the  premium,  and,  as  all  the  world 
knows,  they  made  their  payments  exclusively  in  silver. 

The  French  legislator  intended  that  where  the  variation 
in  the  value  should  become  sufficiently  sensible  to  destroy 
the  equilibrium  between  the  respective  weights  in  gold  and 
silver,  represented  by  the  numbers  1  and  15  J,  the  govern- 
ment should  not  only  have  the  right,  but  the  duty  of  ef- 
fecting a  recoinage,  with  a  view  to  protect  the  interests 


OF    THE    FALL    OF    GOLD.  155 

towards  which  the  legislator  contracted  a  solemn  engage- 
ment in  the  year  11,  interests  perfectly  respectable,  and 
in  fact,  the  interest  of  society  in  the  mass.  This  obliga- 
tion is  especially  binding  in  the  case,  which  is  now  immi- 
nent, in  which  the  variation  of  gold  has  been  in  the  direc- 
tion of  a  fall ;  for,  in  the  opposite  case,  that  of  the  rise  of 
this  metal,  no  wrong  can  possibly  arise.  In  fact,  no  one 
could  then  be  wronged,  unless  it  were  the  debtor  who  dis- 
charged his  obligations  in  gold  ;  but  it  is  evident  that 
the  debtors  would  in  such  a  case  pay  in  silver,  nothing  but 
silver.  How  can  it  be  supposed  that  a  debtor  would  go 
in  search  of  the  dearer  metal,  and  not  make  his  payments 
in  the  cheaper  ?  In  fine,  what  payment  of  any  impor- 
tance was  made  in  gold  coins  in  the  twenty  years  which 
preceded  the  discovery  of  the  mines  of  California  and  Aus- 
tralia ? 

Now,  if  the  legislator  has  the  right  and  duty  to  recoin 
the  gold  currency,  in  order  that  in  the  piece  of  20  francs, 
to  speak  only  of  this  particular  coin,  there  shall  hence- 
forth be  a  larger  quantity  of  gold,  he  has  equally  the  right 
to  effect  another  operation,  in  substance  identically  the 
same,  that  of  enacting  that  the  piece  actually  called  20 
francs  shall  only  be  worth  19J,  or  19J,  or  19,  and  after- 
wards 18,  if  such  is  the  value  which  results  from  the  com- 
parison of  the  market  price  of  the  two  metals. 

Substantially,  in  all  the  systems  of  recoining,  as  in  the 
case  where  we  might  adopt,  provisionally,  the  plan  of  leav- 
ing the  present  gold  coins  to  circulate,  assigning  to  them 
a  less  value  than  that  inscribed  on  their  reverse,  the  only 
embarrassing  question  is  to  know  who  shall  bear  the  loss 
representing  the  diminished  value  of  the  metal.  For  every 
particular  coin,  in  the  actual  state  of  things,  this  loss  would 
be  very  limited  ;  but  bearing  in  mind  the  enormous  amount 
of  coinage  which  has  taken  place,  the  total  loss  would 
amount  to  a  very  large  sum.  Whatever  was  the  expense 


156  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

to  which  it  might  be  necessary  to  submit,  that  would  be 
no  sufficient  reason  why  the  State  should  shrink  from  its 
responsibility  and  falsify  the  natural  meaning  of  the  law, 
if  it  was  really  in  equity  bound  to  support  the  loss.  How- 
ever, on  this  point,  it  seems  to  me  that  there  are  sufficient 
reasons  for  maintaining  that  the  diminution  of  value  would 
fall  legitimately  on  the  private  holders  of  the  coins,  in- 
stead of  being  made  a  charge  upon  the  State.  What  are 
the  grounds  in  virtue  of  which  the  State  should  be  made 
to  bear  this  sacrifice  ?  The  persons  who  maintain  this 
opinion  urge  that  the  State  in  issuing  these  pieces,  having 
assigned  to  them  the  value  of  20  francs,  that  is  to  say  of 
a  hundred  grammes  of  nine-tenths  fineness,  has  made  it- 
self responsible,  and  that  it  is  bound  to  redeem  them  on 
this  footing,  if  it  decides  that  they  shall  cease  to  circulate 
at  their  present  value.  This  argument  has  but  one  fault, 
that  of  wanting  a  foundation,  for  the  fact  on  which  it 
rests  does  not  exist.  It  is  not  the  State  which  has  issued 
the  pieces  of  gold  money  any  more  than  the  pieces  of  sil- 
ver ;  it  is  by  private  individuals  that  the  emission  has 
been  made.  In  France,  the  part  of  the  State,  with  re- 
gard to  the  coining  of  money,  reduces  itself  to  a  simple 
surveillance.  It  certifies,  with  solemn  forms,  and  the  so- 
lemnity is  here  well-placed,  that  the  coins  which  issue  from 
the  scales  possess  the  weight  and  fineness  intended  by  the 
law.  The  directors  of  the  mint  undertake  to  work  by  con- 
tract, according  to  a  tariff  which  the  government  has  set- 
tled for  private  individuals,  who,  possessing  gold  and  silver, 
wish  to  convert  those  metals  into  coins.  They  do  not 
manufacture  on  account  of  the  State.  Under  the  ancient 
regime,  when  Louis  le  Bel  committed  scandalous  frauds 
on  the  currency,  the  mints  worked  on  account  of  the  king. 
It  may  have  always  been  so  whilst  the  sovereign  appro- 
priated to  himself,  under  the  name  of  seignorage,  or  any 
other  name,  an  exorbitant  profit  upon  the  coinage.  On 


OF   THE    FALL   OF    GOLD.  157 

the  contrary,  it  is  now  a  settled  principle  that  the  State 
should  gain  nothing  by  the  mint,  and  that  the  charge  to 
be  levied  on  the  gold  and  silver  brought  to  be  coined  should 
be  as  moderate  as  possible,  so  as  to  represent  merely  the 
expenses  and  interest  of  capital.*  So  true  is  this,  that 
we  see  in  France  that,  in  proportion  as  the  process  of 
coining  is  perfected,  the  tariff  of  charges  at  the  mint  di- 
minishes. There  are  even  States  where,  as  in  England, 
the  public  treasury  supports  the  expenses  of  coining. 
Under  such  circumstances,  can  there  be  any  ground  for 
saying  that  in  France,  the  State  has  guaranteed  anything 
to  the  public,  on  the  subject  of  the  gold  coins,  beyond  the 
exactness  of  the  weight  and  fineness  decreed  by  the  law  ? 
And  if  it  be  settled  that  the  law,  both  in  spirit  and  letter, 
decides  that  the  gold  coins  remain  the  equivalent  of  20  or 
of  40  francs,  in  payments,  only  so  long  as  the  respective 
value  of  the  two  precious  metals  shall  continue  to  be  de- 
fined by  the  relation  of  1  to  15J-,  would  those  individuals 
who  should  not  take  advantage  of  their  pretended  igno- 
rance of  the  law,  be  warranted  in  showing  their  astonish- 
ment at  learning,  some  fine  day,  that  the  disc  of  gold 
which  they  have  in  their  pocket,  which  had  been  previously 
worth  20  francs,  was,  henceforth,  worth  only  19J  or  per- 
haps 19J? 

The  argument  attempted  to  be  drawn  from  a  pretended 
ignorance  of  the  law,  with  a  view  to  relieve  the  holders  of 
coins  from  the  charge  which  will  fall  on  them  in  case  of 
the  recoinage  of  which  we  are  speaking,  cannot  be  received; 
it  is  a  matter  of  right,  well  determined  ;  but  here  there 
can  be  no  pretext  for  invoking  it,  for  the  law  of  the  year 
11  could  not  be  represented  as  an  improvisation,  some- 
thing dispatched  privately,  without  previous  warning. 

*  In  reality,  the  directors  of  the  mints  come  to  an  agreement  with  the 
capitalists  who  carry  on  the  commerce  of  the  precious  metals,  and  their  real 
benefit  consists  in  the  profits  inherent  in  this  commerce. 


158  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

Far  from  it,  this  law,  finally  drawn  up  with  much  deliber- 
ation, in  the  silence,  it  is  true,  in  which  the  legislative 
mechanism  under  the  Consulate  worked,  had  been  pre- 
ceded, and  announced  by  a  great  number  of  discussions, 
of  projects  of  laws,  of  laws  even,  ever  since  the  year  1789. 
Under  the  Constituante,  the  voice  of  Mirabeau  thundered 
forth  the  fundamental  conditions  of  this  law,  and  from 
this  moment  to  the  year  11,  during  fourteen  consecutive 
years,  the  most  remarkable  unanimity  of  opinion  was  dis- 
played in  favour  of  the  general  ideas,  which  were  defin- 
itively embodied  in  the  law  of  the  year  11.  It  was  diffi- 
cult to  be  more  thoroughly  warned  than  was  the  public 
in  this  affair. 

To  this  opinion,  that  the  State  would  not  have  to  in- 
demnify any  one  in  changing  the  gold  currency,  two  prece- 
dents are  opposed,  drawn  from  the  practice  of  two  govern- 
ments distinguished  for  their  intelligence,  their  integrity, 
and  their  knowledge  of  business.  Belgium  and  Holland 
have  modified  their  legislation  on  the  subject  of  their  gold 
currency,  and,  in  this  operation,  the  diminution  of  value 
which  the  gold  coins  have  undergone,  in  consequence  of 
the  fall  of  the  metal,  has  been  placed  to  the  charge  of  the 
State.  In  Belgium,  and  in  Holland,  the  State,  in  with- 
drawing from  the  gold  coins  the  legal  tender,  offered  to 
the  holders  the  nominal  value  at  which  they  had  previously 
passed,  in  silver.  We  are  asked  whether  this  is  not  a  rea- 
son why  the  State  should  do  the  same  in  France. 

The  example  of  Belgium,  which  had  a  monetary  legis- 
lation analogous  to  that  of  France,  cannot,  however,  have 
here  much  weight.  Belgium  had  no  gold  coinage  until 
1847.  A  law  then  authorised  the  fabrication  of  national 
gold  pieces  of  25  francs,  and  of  10  francs;  but  the  issue 
was  expressly  limited  by  the  law  to  20  million  of  francs 
(£800,000),  and  it  only  attained  to  14,646,025  francs 


OF    THE    FALL    OF    GOLD.  159 

(£585,841).*  This  money  was  only  in  an  experimental 
state  in  Belgium  when  it  was  thought  that  it  might  be 
proper  to  deprive  it  of  its  legal  attribute.  The  adminis- 
tration received.,  by  the  law  of  28th  December,  1850, 
powers  to  this  effect,  which  it  might  use  when  it  should 
judge  the  circumstances  opportune.  It  only  availed  itself 
of  the  law  in  1854  (royal  edict  of  the  15th  August).  At 
this  time  the  depreciation  of  gold  in  comparison  with  sil- 
ver was  very  trivial.  In  engaging  to  pay  the  nominal 
value  of  the  gold  pieces  in  silver  currency,  the  State  in- 
curred no  risk  of  any  serious  loss.  In  fact,  this  restitution 
has  cost  it  nothing.  The  National  Bank  and  the  Societ& 
Generate  have  supported, — each  the  moiety, — the  moder- 
ate loss  to  which  the  operation  has  given  rise.f  By  this 
proceeding,  the  Belgian  government  contrived  to  parry  be- 
forehand, without  in  the  least  compromising  its  finances, 
the  objections  which  discussions  on  such  matters  will  raise 
in  a  parliament.  I  do  not  pretend  that  Belgium  has  done 
wrong  ;  but  it  does  not  seem  to  me  that  what  she  has  done 
should  be  a  precedent  to  bind  France. 

In  Holland,  the  question  of  reimbursement  in  silver 
presented  greater  difficulties,  for  there  had  been  coined  a 
much  larger  mass  of  gold  money.  The  pieces  of  5  and  10 
florins  formed  a  total  of  172,583,995  florins,  or  370  mil- 
lions of  francs^  (£14,800,000).  In  proportion  to  the 
population  it  is  as  5  milliards  for  France  (£200,000,000). 
Nevertheless,  the  Dutch  government  did  not  hesitate  to 

*  When  these  gold  pieces  were  demonetised,  only  11,987,300  francs 
(£479,692)  were  presented  for  payment. 

f  It  appears  from  the  published  account  of  the  National  Bank  that  its 
loss  by  this  transaction  amounted  to  140,032  francs,  67  centimes  (£5,601). 
It  found  a  compensation  in  the  use  of  the  funds  which  the  treasury  had  left 
in  its  charge. 

\  It  is  curious  that  less  than  a  third  should  have  been  presented  for  re- 
imbursement, exactly  49,790,970  florins.  On  this  subject,  however,  it  must 
be  borne  in  mind,  that  of  the  sum  of  about  173  millions  of  florins  which  had 
been  coined,  96,490,590  had  been  struck  in  Brussels. 


160  MEASURES   TO    AVERT    THE   EVIL    EFFECTS 

assume  the  charge  for  reimbursement  in  silver.  But,  was 
the  legislation  of  Holland  the  same  as  our  own  ?  Did 
not  the  Dutch  law  admit  of  the  two  standards  ?  If  it 
did,  the  State  was  bound  in  honesty  by  an  engagement, 
tacit  at  least,  to  barter  the  coins  made  of  one  of  these 
metals  for  a  value,  nominally  equal,  in  coins  of  the  other, 
whenever  it  should  decide  to  modify  its  monetary  system, 
by  demonetising  its  gold  currency.  There  is  nothing  in 
that  which  is  applicable  to  France. 

I  have  said  that  the  legislation  of  Holland  recognised 
the  two  standards.  The  text  of  the  law  of  the  28th  Sep- 
tember, 1816,  which  was  the  fundamental  monetary  act 
of  the  Netherlands,  warrants  a  doubt  on  this  point,  and 
it  may  be  said  that  that  law  did  not  solve  the  question  of 
the  double  or  single  standard ;  the  question  was  never 
mentioned, — but  that  was  itself  sufficient  to  solve  it.  If 
it  had  been  intended  that  there  should  be  only  one  stand- 
ard, which  would  have  been  regarded  as  an  innovation 
upon  the  old  usages  which  they  were  reviving,  the  exposS 
des  motifs  would  have  made  it  known  ;  but  there  is  noth- 
ing said,  absolutely,  either  in  that  document,  or  in  the 
preamble  at  the  head  of  the  act :  moreover,  the  Dutch 
legislator  himself,  of  1816,  the  period  in  question,  appears 
always  to  have  thought  that  the  country  was  under  the 
regime  of  the  double  standard.  The  text  of  several  laws 
proves  it.  We  may  refer,  for  example,  to  the  preamble 
of  the  law  of  the  26th  November,  1847. 

Another  difference,  worthy  of  being  cited,  between  the 
monetary  legislation  of  the  Dutch  and  that  of  France, 
consists  in  this,  that  in  Holland  the  gold  pieces  of  5  and 
and  of  10  florins,  which  are  those  that  the  government 
withdrew  from  circulation,  paying  for  them  in  silver,  florin 
for  florin,  had  been  issued  by  itself  and  on  its  own  respon- 
sibility. It  had  expressly  reserved  to  itself  the  monopoly 
of  this  issue,  and  it  was  only  just  that  it  should  support 


OF   THE    FALL    OF   GOLD.  161 

all  the  risks.*  The  part  played  at  the  mint  by  the 
French  government  is,  as  we  have  seen,  very  different 
from  this. 

Upon  the  point  under  discussion,  that  is  as  to  the 
party  on  whom  should  fall  the  expense  of  a  recoinage,  or 
the  loss  on  the  value  of  a  piece  of  gold,  it  may  "be  here  re- 
marked that  the  case  had  been  already  foreseen  in  some 
of  those  documents  which  served  for  a  preparation  for  the 
law  of  7  Germinal,  year  11,  particularly  in  the  first  report 
of  Gaudin  to  the  consuls.  Now,  on  the  course  to  be  taken, 
Gaudin  never  hesitates  ;  he  says  in  express  terms — "  The 
expense  shall  be  borne  by  private  individuals."  It  is  a 
passage  in  his  report  which  I  have  repeatedly  quoted  in 
the  course  of  this  work.  Nothing  occurred  to  impair  the 
force  of  the  words  of  Gaudin  in  the  course  of  the  long 
preparation  which  the  law  underwent ;  and  this,  if  I  mis- 
take not,  is  an  argument  of  some  weight. 

It  must  not  be  supposed  that,  in  the  present  state  of 
things  the  loss  would  be  serious  for  the  bulk  of  individu- 
als, even  of  the  rich.  At  this  moment  the  depreciation 
of  gold,  in  comparison  with  silver,  is  very  small ;  and  con- 
sequently for  a  sum  of  1,000  or  2,000  francs,  which  is  as 
much  as  a  person  in  easy  circumstances  has  ordinarily  in 
hand,  with  very  few  exceptions,  the  loss,  supposing  it  to 
be  1  per  cent,f  would  be  10  or  20  francs  ;  let  us  double 
it,  and  still  it  is  insignificant  compared  with  the  fortunes 

*  The  article  11  of  the  fundamental  law  on  the  currency  of  Holland,  of 
the  28th  September,  1816,  runs  thus  : — "The  coins  for  the  convenience  of 
commerce  shall  only  be  fabricated  for  the  account  of  individuals.  The 
pieces  of  1  florin  and  of  3  florins  may  also  be  fabricated  on  account  of  indi- 
viduals ;  but  the  pieces  of  gold  of  10  florins,  the  pieces  of  fractional  parts  of 
the  florin,  and  coins  of  copper,  shall  not,  absolutely,  be  fabricated  for  the 
account  of  individuals,  but  only  for  the  account  and  by  order  of  the  gov- 
ernment." Later,  when  it  was  decided  to  coin  pieces  of  gold  of  5  florins, 
they  were  subjected  to  the  same  regime  as  those  of  10. 

f  In  Belgium,  where,  in  consequence  of  the  new  legislation  on  the  cur- 
ency,  tlie  phenomenon  of  the  variations  of  value  between  the  two  metals 
11 


\ 


162  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

of  those  persons.  Besides,  to  those  who  complained,  there 
would  be  the  right  to  reply  that  the  government  imposes 
no  sacrifices  on  them,  that  it  limits  itself  to  the  putting 
an  end  to  a  fiction  and  a  confusion  prejudicial  to  the 
public  interest,  and  that,  if  they  find  themselves  injured, 
it  arises  out  of  the  nature  of  things  exactly  the  same  as 
when  a  fall  takes  place  in  wheat,  wine,  cattle,  or  cotton 
goods. 

But  one  word  more.  Even  if  we  should  be  of  opinion 
that  it  is  the  State  which  ought  to  bear  the  diminution 
of  value  which  the  gold  coins  have  now  sustained,  that 
would  be  no  reason  for  not  proceeding  with  the  change. 
Imperious  motives,  economical  and  political,  command  us 
to  take  a  decided  course.  We  should  prepare  for  our- 
selves much  future  regret,  if  we  were  longer  to  delay. 
The  expense  of  a  recoinage,  made  even  at  the  cost  of  the 
State,  is  as  nothing  compared  with  the  losses  to  which  we 
shall  subject  ourselves  if  we  do  not  hasten  to  act  in  accord- 
ance with  sound  principles,  and  to  the  prescriptions  of  the 
law  faithfully  interpreted.  Nevertheless,  however  small 
may  be  the  chance  one  has  in  France,  where  he  sustains  the 
public  interest  against  the  interests  of  individuals,  I  can- 
not refrain  from  repeating  that  from  the  terms  of  the 
documents  which  define  the  sense  of  the  law,  and  accord- 
ing to  the  text,  reasonably  interpreted,  of  the  law  itself, 

is  more  apparent  than  with  us,  the  20  franc  gold  pieces  have  never  lost 
much,  in  comparison  with  silver ;  at  the  outside  \  per  cent :  they  are  re- 
ceived at  par  in  the  hotels,  and  in  the  large  shops.  It  is  probable,  how- 
ever, that  if  France  abolished  the  legal  relation  of  1  to  15-£  between  the  two 
precious  metals,  the  fall  in  gold  would  be  more  decided,  because  Franco 
now  plays  the  part,  at  her  own  expense,  as  I  have  already  shown,  of  a  para- 
chute for  gold.  So  long  as  she  offers  to  the  bullion  merchants  a  market 
where  they  can  barter  their  gold  for  silver  on  the  footing  of  1  against  15£, 
the  value  of  gold  in  its  relation  to  silver  cannot,  in  Europe,  deviate  much 
from  this  relation.  The  deviation  will  only  become  more  decided  from  the 
moment  when  France  shall  have  been  exhausted  of  her  silver,  unless  she 
shall  have  previously  renounced  that  fixation,  henceforth  arbitrary. 


OF   THE    FALL    OF    GOLD.  163 

the  State  is  not  bound  to  offer  any  indemnity  to  the  hold- 
ers of  the  gold  coins. 

If  the  legislator  were  now  to  adopt  the  conservative 
measures  which  have  been  indicated  above,  and  to  which 
he  is  led  by  a  fair  interpretation  of  existing  legislation,  we 
are  warranted  in  believing  that  everything  would  pass 
without  shock,  and  that  the  instrument  of  exchanges 
would  remain  in  the  condition  of  abundance  required  for 
the  ordinary  extent  of  our  transactions.  There  is,  in  fact, 
still  a  good  deal  of  silver  in  the  departments.  At  the 
height  of  the  extraordinary  demand  for  silver  which  has, 
of  late  years,  manifested  itself  for  India  and  China,  but 
which  has  slackened  in  1858,  Belgium  and  Holland,  which 
have  now  no  legal  currency  but  silver,  have,  experienced 
no  want  of  metallic  money,  and  this  is  a  double  experience 
which  is  convincing.  Then  we  must  not  forget  that,  with 
the  combination  which  I  have  quoted  from  the  proposition 
of  the  Council  of  the  Five  Hundred,  modified  by  the 
Committee  of  the  Ancients,  gold  would  not  cease  to  circu- 
late in  France  in  large  proportions.  There  is  no  visible 
reason  why  under  this  regime,  much  less  absolute  than 
that  which  has  been  adopted  in  Belgium  and  in  Holland, 
gold  should  retire  from  the  circulation.  Everything,  on 
the  contrary,  leads  to  the  belief  that  it  would  remain  to 
the  extent  to  which  we  should  require  it.  With'  respect 
to  the  precious  metals,  that  which  would  be  thenceforth 
interrupted,  and  it  would  be  so  to  the  great  advantage  of 
the  public,  is  the  current,  so  violent  for  several  years, 
which  replaces,  in  the  circulation  of  France,  the  silver 
money  by  a  gold  currency,  and  which,  if  it  be  not  arrest- 
ed, will  overturn  the  monetary  system  which  the  legisla- 
ture of  France,  regenerated  by  the  Kevolution,  flattered 
itself  it  had  firmly  established  upon  immutable  founda- 
tions. 


164 


MEASURES  TO  AVERT  THE  EVIL  EFFECTS 


CHAPTER  III. 

THE  MEASUllE  IIEKE  EECOMMENDSD  IS  A  NECESSAEY  COMPLEMENT 
OF  THE  LAW  OF  GEEMINAL,  YEAK  XI. 

I  BEG  the  reader  to  observe  that  the  combination  which 
has  been  discussed  in  the  preceding  chapter,  relative  to  a 
gold  currency,  ought  not  to  be  represented  asy  in  any  de- 
gree, the  negation  of  the  law  of  the  year  11.  It  is,  on  the 
contrary,  its  complement,  the  necessity  of  which  has  been 
demonstrated  by  experience.  The  object  which  the  minis- 
ter of  finance,  Gaudin,  had  in  view,  and  which  the  legisla- 
tor decided  resolutely  to  carry  out,  was  to  prevent  all  dis- 
pute between  private  individuals  relative  to  the  value  of  a 
gold  currency  in  francs,  or,  in  other  words,  in  pieces  of 
silver,  since  the  law  has  defined  the  franc  to  be  a  weight 
of  silver  agreed  upon  once  for  all.  The  means  employed 
was  a  legislative  fixation,  which  should  be  conformable  to 
the  commercial  value  of  the  two  metals,  in  their  relation 
the  one  to  the  other.  The  adversaries  of  Gaudin,  as  may 
be  seen  by  the  reports  of  Berenger,  vainly  objected  that 
this  fixation  by  the  law  appeared  superfluous,  and  cited 
some  States  where  gold  circulated  simultaneously  with 
silver  without  difficulty,  without  any  intervention  from 
the  legislative  or  administrative  authority.  The  majority 
of  the  Council  of  State,  and  afterwards  the  Tribunal  of 
the  Legislative  Body,  both  of  which  deliberated  very 
maturely,  thought  that,  to  insure  the  parallel  circulation 
of  gold  and  silver  coins,  a  fixation  by  law  of  the  relation 
existing  between  the  two  metals  was  the  best  course  to 
follow. 

It  was  well  known,  and  Gaudin  knew  it  perfectly,  as 
the  reports  emanating  from  him  prove,  that  the  relation 
of  the  value  of  the  two  metals  is  mobile  ;  it  has  not  ceased 
to  vary  more  or  less  since  the  origin  of  civilisation.  It 


OF    THE    FALL    OF   GOLD,  165 

was  well  understood  that  if  gold,  for  example,  fall  in  value 
in  relation  to  silver,  so  as  to  be  no  longer  worth  fifteen  and  a 
half  times  its  weight  of  that  metal,  the  proportion  recog- 
nised in  the  year  11,  the  consequence  is,  that  it  will  be- 
come superabundant  in  the  circulation,  and  that  silver,  on 
the  contrary,  will  gradually  disappear  ;  since  the  natural 
tendency  of  debtors  can  never  fail  to  be,  to  make  their  pay- 
ments with  the  cheapest  commodity  :  just  as  in  the  case 
in  which  gold  should  acquire  a  superior  value  to  that 
which  it  possessed  previously,  gold  would  disappear. 
Phenomena  of  this  kind  have  been  observable  in  all  times 
and  in  all  countries.  Gold  and  silver,  like  all  other  com- 
modities, shun  the  markets  where  they  are  not  taken  for 
their  full  value,  and  flow  towards  those  where  they  meet 
with  better  terms  ;  consequently,  it  was  well  understood, 
and  it  is  intimated  in  twenty  passages  of  the  documents 
which  served  as  the  preparation  for  the  law,  as  well  as  in 
the  expose  des  motifs,  that  whenever  a  reciprocal  change 
between  the  two  metals  should  be  manifested,*  the  gold 
currency  should  undergo  a  modification. 

But  the  elements  were  wanting  necessary  for  determin- 
ing the  extent  of  the  change  of  the  reciprocal  value  be- 
tween the  two  metals,  which  might  derange  the  monetary 
mechanism,  as  it  was  then  agreed  upon,  and  which  might 
be  of  a  nature  to  prevent  the  parallel  circulation  of  gold 
and  silver  coins.  It  was  not  then  thought  necessary  to 
say, — there  shall  be  a  recoinage  whenever  the  relation  of 
1  to  15J,  which  now  exists  between  the  two  metals  in  the 
market,  and  which  is  for  the  present  given  as  the  basis  of 
the  fabrication  of  the  gold  coinage,  shall  have  been  modi- 
fied one  per  cent,  or  two,  or  three,  or  more  or  less.  It 
was  understood,  and  in  that  we  have  a  proof  of  the  good 
sense  which  is  one  of  the  qualities  of  the  legislature,  that 

*  I  have  already  remarked  above  that  the  fact  resulted  from  the  very 
context  of  the  law. 


166  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

it  was  left  to  experience  to  decide.  It  was  agreed  that 
they  should  wait  until  the  signal  was  given  by  events  : 
the  word  is  Gaudin's,  as  may  be  seen  in  his  first  report. 
He  trusted  to  the  intelligence  of  future  governments,  to 
their  good  faith,  and  public  spirit,  for  comprehending  the 
language  of  events. 

It  is  thus  that  it  was  left  undetermined,  in  the  system 
of  the  law  of  the  year  11,  by  any  positive  sign,  when  the 
day  would  come  for  recoining  the  gold  pieces,  and  chang- 
ing the  proportion  of  metal  which  corresponds  with  a 
franc.  It  is  this  indeterminateness  which  furnishes  the 
excuse,  or  pretext,  for  the  tolerance  with  which  gold  is 
now  treated,  as  if  it  continued  to  be  worth  15 \  times  its 
weight  in  silver, — a  tolerance  which  falsifies  our  monetary 
system,  and  which  threatens  to  open  the  door  to  the  in- 
convenience and  injustice  which  I  have  attempted  to  ex- 
plain. 

The  measure  which  has  been  indicated  in  the  preced- 
ing chapter  has  for  its  object  to  put  an  end  to  this  deplor- 
able indeterminateness,  while  still  remaining  faithful  to 
the  idea  adopted  by  the  legislator  in  the  year  11, — that 
there  should  always  be  a  legal  fixation  of  the  relative 
value  of  gold  and  silver,  but  also  never  forgetting  the  en- 
gagement which  was  at  the  same  time  entered  into  by  the 
legislator  when  he  said,  in  his  expose  des  motifs,  that  the 
monetary  system  of  France  would  henceforth  offer  "a 
guarantee  for  the  fulfilment  of  commercial  transactions 
and  the  conservation  of  property  which  we  do  not  see" 
(they  could  say  so  in  the  year  11)  "  in  the  monetary  legis- 
lation of  any  other  people/' 


OF    THE    FALL    OF    GOLD.  167 


CHAPTER  IV. 

ON  SOME  INCONVENIENCES  INHEEENT  IN  THE  COMBINATION,  RESPECT- 
ING A  GOLD  CUEEENCT,  EECOMMENDED  IN  THIS  WOEK. 

THE  plans  recommended  in  this  work,  respecting  a  gold 
currency,  are  they  absolutely  free  from  all  inconveniences  ? 
I  do  not  pretend  that  they  are.  It  would  result  that  from 
the  fact  that  the  cashier  had  in  his  charge  gold  coins 
which  he  was  justified,  on  the  31st  December,  in  consid- 
ering worth  a  certain  sum,  he  would,  without  having 
touched,  or  added  to  or  deducted  from  them,  on  the  1st 
January,  when  the  periodical  revision  of  the  tariff  took 
place,  possess  the  same  gold  coins  in  true  relation  with 
silver.  What  is  said  of  cashiers  would  also  be  true  of 
every  private  individual  having  in  his  house  or  pocket  any 
gold  coin.  In  what  concerns  the  receivers  of  the  public 
revenues  the  objection  is  serious.  It  seems,  in  fact,  that 
they  would  be  placed  in  a  false  position,  and  every  six 
months  (I  assume  that  the  revision  would  be  half-yearly) 
be  exposed  to  a  clear  loss,  or  find  themselves  in  the  way 
of  making  an  unmerited  profit.  This  difficulty,  however, 
is  not  insurmountable.  Would  it  not  suffice,  for  example, 
if  the  cashiers  were  to  state  the  amount  which  they  had 
separately  in  gold  and  silver  coins  ?  It  would  also  be 
well  if  they  distinguished  the  sums  which  they  held  in 
bank  notes.  Such  a  task  need  not  be  very  difficult. 

With  regard  to  the  public  in  general,  it  would  not  be 
impossible  to  prevent  private  interests %  from  suffering  a 
serious  loss  at  the  end  of  each  six  months,  in  consequence 
of  the  depreciation  of  the  gold  which  each  individual 
might  have  on  hand.  In  fact,  everybody  might  so  arrange 
as  only  to  have  just  so  much  as  he  pleased  in  his  posses- 
sion. This  rule  might  be  easily  observed,  if,  adopting  an 
idea  which  has  been  thrown  out,  the  law  were  to  limit  to  a 


168  MEASUEES   TO    AVERT   THE    EVIL    EFFECTS 

certain  maximum,  such  as  the  sum  of  a  thousand  francs, 
the  amount  which  the  creditor  should  be  forced  to  receive 
in  gold  ;  so  that  in  private  transactions,  beyond  this  sum, 
it  should  be  left  to  the  voluntary  agreement  of  parties  to 
decide  the  nature  of  the  money  in  which  payment  should 
be  made.  But  it  is  a  clause  which  would  give  rise  to 
great  difficulties  in  regard  to  the  State,  and  to  certain 
large  establishments,  such  as  the  bank. 

In  all  this  I  do  hot  trouble  myself  about  those  indi- 
viduals who  should  have  hoarded  large  sums  to  keep  them 
indefinitely  concealed.  If,  at  last,  after  a  long  lapse  of 
time,  they  experienced  a  great  loss,  they  would  have  only 
themselves  to  blame. 

In  fine,  we  must  not  forget  that  the  evil  of  which,  at 
this  moment,  we  are  seeking  the  remedy, — that  is,  the 
loss  which  the  holder  of  gold  specie  might  in  spite  of  him- 
self encounter,  in  consequence  of  the  fall  of  that  metal  in 
the  course  of  six  months,  would  not,  in  all  probability,  be 
anything  considerable.  In  fact,  the  case  we  are  examin- 
ing is  rather  imaginary  than  real.  It  is  one  of  those  hy- 
potheses which  we  discuss  in  books  when  we  are  in  the 
mood  for  argumentation,  but  to  which  the  administrator 
and  statesman  attach  but  little  importance. 

Let  us,  however,  acknowledge,  without  hesitation,  that 
the  system  which  is  here  submitted  to  the  appreciation  of 
the  public,  and  which  is  destined  to  maintain  the  parallel 
circulation  of  the  two  metals,  without  violating  the  sacred 
principle  of  a  single  standard,  will  not  insure  at  each  in- 
stant an  absolute  compensation  or  a  mathematical  equi- 
librium. It  is  a  mechanism  which  in  its  movement  may 
rub  a  little.  But,  I  repeat,  the  question  is  not  whether 
it  be  perfect.  It  is  rather, — what  is  the  combination 
which  deviates  the  least  from  perfection,  and  which  offers 
the  fewest  inconveniences  ?  When  once  we  have  proposed 
and  accepted  a  plan  for  maintaining,  parallel  with  each 


OF    THE    FALL    OF    GOLD,  169 

other,  the  two  metals  in  circulation,  still  remaining  faith- 
ful to  the  principles  which  prescribe  but  one  standard, 
and  always  respecting  the  law  and  the  precedents  which 
very  opportunely  in  France  assign  this  attribute  to  silver, 
the  only  question  is, — are  the  accidental  derangements 
which  might  affect  the  system,  such  as  ought  to  frighten 
us,  and  are  they  comparable  with  the  evil  effects  which 
we  have  reason  to  expect  from  the  other  combinations  ? 
There  is  the  question,  the  whole  question  ;  and  thus  stated 
I  think  it  will  be  answered  in  the  negative.  In  any  case, 
the  worst  of  all  systems  is  that  of  which  France  has  offered 
the  spectacle  for  several  years,  not  in  the  name  of  the  law, 
but  in  opposition  to  the  letter  and  text  of  legislation,  and 
in  consequence  of  the  inattention  of  the  public  authori- 
ties,— I  mean  that  in  which  we  see  affairs  proceeding  as 
if  the  two  metals  were  placed  on  the  same  footing  in  the 
currency,  and  were  one  as  well  as  the  other  invested  with 
the  dignity  of  the  standard. 

I  am  acquainted  with  some  intelligent  persons  who 
are  of  opinion  that  the  best  system  would  be  that  which 
has  prevailed  in  Belgium,  in  Holland,  in  the  Germanic 
Confederation,  and  in  Naples,  the  principle  of  which  is  to 
leave  absolutely  to  commerce  the  care  of  fixing  the  value 
of  the  gold  coins  in  relation  to  silver  recognised  as  the 
standard.  The  combination  here  recommended,  has,  in 
relation  to  the  above  plan,  the  fault  of  a  certain  degree  of 
complication  ;  but  having  regard  for  the  habits  and  man- 
ners of  life  of  the  French  public,  I  think  it  preferable.  It 
is  more  in  conformity  with  the  traditions  established  by 
the  law  of  the  year  11,  and  with  the  object  of  that  law, — 
to  establish  the  parallel  circulation  of  the  two  precious 
metals,  while  starting  from  the  principle  that  silver  is  the 
standard.  Doubtless,  the  system  which  I  shall  call  Dutch, 
on  account  of  the  nation  which  was  the  first,  in  these 
later  times,  to  put  it  into  practice,  presents  itself  with 


170  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

the  authority  of  several  governments  who  have  adopted  it 
after  mature  deliberation,  and  to  whose  enlightenment  I 
render  homage.  Such  a  preference  is  an  argument  of 
great  weight.  This  system  subsists,  and  is  in  operation 
in  several  States  which  have  adopted  it  to  the  satisfaction 
of  their  populations.  But  it  must  also  be  admitted  that 
it  is  a  weighty  argument  in  favour  of  the  combination 
which  I  have  developed, — that  it  is  the  continuation  of 
our  antecedents,  at  the  same  time  that  it  is  in  its  whole 
extent  desirable  as  consistent  with  scientific  principles. 
Moreover,  if  experience  should  develop  any  unforeseen  and 
grave  inconvenience,  we  should  always  be  able  to  revert 
to  the  plan  which  has  been  preferred  by  the  above-named 
governments. 


CHAPTER  V. 

OF   A  PLAN  EECOMMENDED  FOE  MAINTAINING  THE  PAEALLEL  CIE- 
CULATION  OF  SILVEE  AND   GOLD. 

M.  GUSTAVE  DE  MOLINABI,  the  distinguished  professor  of 
political  economy,  at  the  Musee  Royal  de  I'lndustrie,  in 
Belgium,  and  at  the  Institut  Superieur  du  Commerce,  at 
Antwerp,  has  recommended  a  monetary  mechanism  calcu- 
lated to  maintain  in  France  the  double  circulation  of  sil- 
ver and  gold,  whilst  recognising  in  silver  the  sole  quality 
of  standard.  To  assure  to  gold,  in  all  the  latitude  possi- 
ble, the  function  of  auxiliary  which  the  law  of  the  year 
11  has  assigned  to  it,  and  to  prevent  at  the  same  time  the 
possibility  of  its  being  surpassed,  M.  de  Molinari  would 
have  gold  coins  containing  a  quantity  of  metal  sensibly 
inferior  to  that  which  corresponds  with  the  value  of  gold 
in  its  relation  to  silver.  This  would,  according  to  him,  be 
giving  to  gold  coins  the  character  of  tokens,  in  the  same 


OF    THE    FALL    OF    GOLD.  171 

way  as  in  England  is  managed  with  silver.  In  this  sys- 
tem, the  French  government  would  reserve  to  itself  the 
sole  right  to  issue  gold  coins,  as  the  English  government 
does  in  the  case  of  silver  ;  and,  as  the  circulation  of  France 
is  becoming  saturated  with  gold,  it  would  be  necessary, 
provisionally  at  least,  to  stop  its  fabrication.  Besides,  to 
give  to  the  holders  of  the  gold  currency  a  guarantee  against 
excessive  issues,  to  assure  in  some  degree  the  value  of  this 
auxiliary  money,  made  from  a  metal  subject  in  our  day  to 
a  depreciation,  it  would  be  necessary  to  make  it  always 
payable  on  demand,  in  silver,  like  bank  notes.  These 
conditions  complied  with,  the  value  of  the  gold  currency 
would  be  as  stable  as  that  of  the  silver  on  which  it  was 
based,  and,  as  gold  is  more  convenient  in  use  than  silver 
in  the  generality  of  transactions,  it  would  be  resorted  to 
in  preference.  The  gold  actually  in  circulation  would  not 
be  withdrawn  to  be  exchanged  for  silver,  any  more  than 
are  the  bank  notes,  and  the  monetary  regime  of  France 
would  unite  the  security  of  the  system  of  Holland 
and  Belgium,  which  is  based  on  silver,  with  the  conveni- 
ence of  the  English  system,  which  rests  upon  gold.* 

This  system  is  certainly  somewhat  seducing  ;  at  first 
sight,  it  seems  calculated  to  remove  all  difficulty  ;  we 
should  have,  for  example,  gold  coins  of  the  weight  of  5 
grammes  of  nine-tenths  fineness,  to  which  would  be  as- 
signed the  value  of  25  francs,  notably  superior  to  their 
real  value.  Owing  to  the  power  of  converting  them  at 
will  into  pieces  of  silver  of  the  effective  value  of  25  francs, 
there  would  be  a  'guarantee  that  they  would  circulate 
with  the  public  for  the  nominal  value  which  the  legisla- 
ture had  assigned  to  them,  and  for  the  excess  even  of  that 
value  relatively  to  the  real  value,  and  thus  the  monetary 
mechanism  in  which  these  coins  should  figure,  would  seem 

*  This  description  is  extracted  from  the  Economiste  Beige,  of  the  10th 
February,  1857,  where  M.  de  Molinari  has  developed  his  idea. 


172  MEASURES    TO    AVERT    THE   EVIL   EFFECTS 

to  be  forever  beyond  the  reach  of  the  perturbations  which 
the  fall  in  gold  can  occasion. 

Let  us  in  the  first  place  offer  an  observation  on  the 
name  which  M.  de  Molinari  gives  to  the  operation  which 
he  recommends.  Would  it  really  be  the  issue  of  a  gold 
token  ?  In  the  accurate  sense  of  words  which  could  never 
escape  a  person  so  highly  versed  in  economical  questions, 
the  denomination  of  token  is  not  that  which  is  appropriate 
in  the  present  case.  The  function  of  a  token  is,  in  fact, 
to  be  admitted  into  payments  only  to  make  up  an  amount. 
In  France,  the  token,  which  is  in  bronze,  is  limited  to  five 
francs  ;  in  England,  the  silver  token  is  limited  to  pay- 
ments of  two  pounds  sterling,  or  about  fifty  francs.  The 
pieces  of  gold  of  M.  de  Molinari  having  no  such  limit, 
they  could  not  be  considered  as  tokens.  What  would 
they  be  then  ?  Signs  of  credit,  like  bank  notes,  with 
this  difference,  considerable  however,  that  the  sub- 
stance instead  of  being  of  paper  would  consist  of  the  most 
precious  of  the  metals.  But  this  difference  even  is  not 
perhaps  to  the  advantage  of  the  system  :  if  we  are  to  have 
bank  notes,  it  is  more  simple  and  advantageous  to  make 
them  of  paper. 

M.  de  Molinari  has  felt  the  analogy  between  his  gold 
counters  and  the  bank  note,  and  he  has  formally  recog- 
nised the  necessity  of  giving  them  the  support  of  a  volun- 
tary exchange  for  silver  money.  The  guarantee  is,  un- 
doubtedly, valuable,  but  it  is  also  one  of  the  weak  sides 
of  the  system,  in  so  far  as  it  would  be  an  expense.  It 
would  be  necessary  to  establish  special  treasuries,  with  a 
reserve  of  specie  in  silver  sufficient  for  the  purpose,  or  it 
would  be  necessary  for  certain  public  establishments  to 
take  upon  themselves  the  obligation  of  holding  always 
for  this  purpose  a  considerable  sum  in  five-franc  pieces, 
which  would,  in  point  of  expense,  amount  to  the  same 
thing,  and  besides  would  be  contrary  to  the  rules  estab- 


OF    THE    FALL    OF    GOLF.  173 

lished  by  the  French  administration  for  the  good  order 
and  security  of  the  finances  of  the  State. 

I  repeat  the  opinion  just  expressed  ;  if  it  be  a  question 
of  putting  into  circulation  signs  of  credit,  of  twenty-five 
francs,  it  were  better  that  they  should  be  in  paper.  In 
fact,  an  instrument  of  exchange,  composed  of  pieces  of 
silver  and  of  bank  notes  of  25  francs,  would  be  acceptable, 
except  for  the  circumstances  which  I  am  about  to  note. 

Germany  has  for  forty  years  carried  on  its  affairs  with 
an  instrument  of  exchanges,  composed  almost  exclusively 
of  pieces  of  silver,  thaler s  or  florins,  and  of  bank  notes  or 
notes  of  the  State,  both  of  small  amount.  Gold  figures 
there  only  as  an  accessory  of  small  importance  and  almost 
accidental.  . 

In  France,  the  law  of  1857,  which  prolonged  the 
privilege  of  the  Bank  of  France,  allows  the  circulation  of 
notes  of  50  francs  ;  with  notes  of  this  denomination  and 
with  silver  money,  the  instrument  of  exchanges  would  be 
complete  without  anything  else. 

It  must  not  be  concealed  that  bank  notes  of  25  or  of 
50  francs  (£1  or  £2)  present  some  inconveniences,  and 
expose  the  public  interest  to  some  errors.  Notes  under 
five  pounds  sterling  have  been  prohibited  in  the  United 
Kingdom,  excepting  in  Scotland,  where  the  smallest  note 
authorised  by  law  is  one  pound  sterling.  What  are  the 
grounds  on  which  a  great  number  of  men  versed  in  affairs, 
and  familiar  with  economical  science,  have  pronounced 
against  these  small  notes  ?  It  is  primarily  the  danger  of 
forgery  :  if  these  small  notes  are  left  to  circulate  after 
being  soiled  and  torn,  there  is  reason  to  fear  that  they  will 
be  imitated.  Then,  there  is  also  the  possibility  of  a 
panic  which  might  seize  the  holders  of  small  notes  more 
easily  than  the  richer  and  more  intelligent  classes,  to  whose 
use  the  notes  of  £5  are  chiefly  restricted.  The  effect  of 
this  panic  might  be  to  lead  a  mass  of  individuals  to  pre- 


174  MEASURES   TO   AVERT   THE   EVIL   EFFECTS 

cipitate  themselves  upon  the  banks  to  obtain  the  imme- 
diate payment  of  their  notes,  and  then  these  establish- 
ments might  be  obliged  to  suspend  their  payments. 

Now,  these  two  dangers  would  also  subsist  to  a  suffi- 
ciently marked  degree  with  the  gold  token  of  M.  de  Moli- 
nari,  at  least  from  the  moment  that  it  should  offer,  very 
decidedly,  one  of  the  distinctive  characters  of  the  token, 
of  having  a  nominal  value  notably  superior  to  its  intrinsic 
value.  If  there  is  a  violent  temptation  to  coin  paper 
money,  in  imitation  of  the  signs  generally  accepted  by 
the  public,  such  as  the  real  bank  notes,  we  have  only  to 
wait  until  the  dishonest  speculation  of  issuing  gold  pieces 
passing  for  25  francs,  and  being  only  worth  15,  shall  be- 
come also  profitable.  It  would  be  even  more  easy  to  fab- 
ricate these  counters  than  to  forge  the  bank  notes.  The 
imitation  of  these  latter  is  far  from  easy,  and  might  be 
rendered  very  difficult.  On  the  contrary,  the  reproduction 
of  gold  coins,  of  which  the  impression  should  have  been 
more  or  less  defaced  by  the  circulation,  would  be  a  work 
of  great  facility.  It  would  be  a  mere  joke  for  the  manu- 
facturers of  livery  buttons,  furnished  with  such  machinery 
as  is  now  found  in  workshops  of  that  kind  in  certain  towns 
like  Birmingham. 

The  danger  of  a  panic,  which  might  lead  the  mass  of 
the  population  to  come  and  demand  payment  for  these 
counters  of  gold,  in  their  nominal  amount  in  silver,  would 
be  almost  as  great  as  with  the  small  bank  notes,  on  the 
hypothesis  of  which  I  am  speaking  of  a,  great  divergence 
between  the  nominal  and  the  real  value. 

It  is  true  that  we  should  escape  from  these  two  perils 
by  imposing  the  rule  of  having,  between  the  nominal  and 
the  real  value,  only  a  deviation  of  five,  or  at  the  utmost  of 
ten  per  cent.  But  then  the  combination  would  become 
burdensome  on  account  of  the  sum  which  it  would  be 
necessary  to  keep  in  hand,  in  silver  money,  to  meet  the 


OF    THE   FALL    OF    GOLD.  175 

demand  for  payments.  Suppose  an  issue  of  a  milliard  of 
francs  (£40,000,000)  in  gold  tokens  :  if  the  divergence  is 
7J  per  cent,  that  will  be  a  saving  of  75  millions  (£3,000,- 
000)  in  the  capital  required  to  furnish  the  instrument  of 
exchanges  ;  hut  if  the  public  treasuries  destined  to  guar- 
antee the  payment  on  demand  absorb  for  this  purpose  a 
reserve  of  100  millions  in  silver  money,  the  operation  ends 
in  a  loss. 


CHAPTER  VI. 

OF  THE  RESOLUTIONS  OF  A  COMMISSION  APPOINTED  BY  THE  MINISTER 
OF  FINANCE  IN  MDCCCLVII. 

AFTER  the  discovery  of  the  mines  of  California,  and  before 
that  of  the  auriferous  deposits  of  Australia,  a  commission 
had  been  appointed  by  the  French  government  to  examine 
into  the  probable  effects  of  the  great  and  rapid  arrivals  of 
gold  consequent  on  the  operations  in  the  valleys  of  the 
Sacramento  and  the  San  Joaquim.  This  commission 
came  to  no  conclusion  ;  the  indications  of  experience  were 
then  too  incomplete.  The  facts  having  been  afterwards 
much  strengthened,  a  new  commission  was  named  the 
7th  Feb.,  1857,  by  the  minister  of  finance. 

The  commission  received  instructions  "  to  inquire  into 
the  principal  causes  of  the  monetary  situation,  to  investi- 
gate the  various  questions  which  arise  out  of  it,  and  to  re- 
port its  opinion  on  the  measures  called  for  by  the  general 
interests  of  the  country."  In  these  terms,  the  outline 
traced  for  the  labours  of  the  commission  was  extensive. 
In  February,  1858,  it  had  finished  its  labours,  according 
to  a  more  restricted  plan  which  it  had  traced  for  itself, 
or,  to  speak  more  correctly,  which  had  been  suggested  to 
it,  and  which  it  accepted,  and  in  its  name  a  report  was 
presented,  which  it  is  impossible  to  pass  by  in  silence. 


176  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

In  the  programme  of  which  I  have  just  spoken,  as 
having  been  received  and  accepted,  California  and  Austra- 
lia were  not  upon  the  first  plan  ;  the  fact  of  the  exporta- 
tion of  silver  from  France  was  the  phenomenon  to  which 
the  greatest  importance  was  attached,  and  everything 
was  made  subordinate  to  it.  Australia  and  California 
are  not  even  mentioned,  no  direct  allusion  is  made  to 
them.* 

*  The  following  was  the  programme  : 

1st  Question. — What  is,  in  fact,  the  importance  of  the  exportation  of  sil- 
ver? 

2nd  Question. — To  what  cause,  direct  or  indirect,  must  this  fact  be  at- 
tributed ? 

The  premium  of  silver  over  gold.     Its  degree,  its  variability. 

The  natural  movement  of  our  international  commerce  with  the  countries 
which  prefer  silver. 

Private  and  direct  speculation  of  the  money-changers  and  refiners. 

What  part  belongs  to  each  of  these  causes  ? 

3rd  Question. — What  may  be,  in  a  general  point  of  view,  the  influence 
for  good  or  evil  of  the  destruction  or  the  exportation  of  the  silver  cur- 
rency ? 

What  good  can  arise  beyond  the  private  benefit  which  may  be  derived 
by  the  money-changers  and  refiners  ? 

What  harm  can  ensue : 

To  the  Bank,  and  in  consequence  to  commerce,  by  the  weakening  of 
the  reserves  of  specie  ? 

To  the  State,  in  obliging  it  to  interfere  at  its  cost,  to  replace  constantly 
with  new  coins  those  which  the  refiners  had  melted  ? 

To  commerce,  in  depriving  it,  as  might  happen  very  speedily,  of  a  de- 
scription of  money  which  is  very  necessary  to  it  in  its  relations  with  other 
countries ;  or  in  compelling  it  to  pay  for  it  the  premium  which  the  money- 
changers shall  have  gained? 

4th  Question. — In  face  of  the  fact  and  its  consequences,  is  there  nothing 
for  the  government  to  do  ? 

If  so,  what  steps  ought  it  to  take  ? 

Many  have  been  suggested : 

1.  To  demonetise  gold,  and  bring  it  to  the  state  of  simple  merchandise, 
excepting  the  fixing  officially  its  value  at  periodical  epochs; 

2.  To  transform  silver  money  into  a  conventional  currency,  by  giving  it 
a  nominal  value,  superior  to  its  real  value,  as  in  England ; 

3.  To  transform  the  silver  money,  by  giving  it  a  nominal  value,  equal 
to  its  actual  real  value,  that  is,  by  changing  the  relation  established  by  law 
between  gold  and  silver ; 


OF    THE    FALL    OF    GOLD.  177 

Thus  the  point  of  departure  for  the  deliberations  of 
the  commission  was  not;  perhaps,  the  best  that  could  have 
been  chosen.  As  to  its  conclusions,  they  are  of  a  nature 
to  astonish  those  who  are  conversant  with  economical 
questions  ;  here  is,  in  fact,  the  substance  of  the  report  :— 
The  principal  cause  of  the  disturbance  witnessed  for  sev- 
eral years  in  the  monetary  system  of  France,  is  to  be  traced 
to  the  extraordinary  demand  for  silver  for  exportation  to 
the  remote  East.  This  unusual  demand  has  caused  a  rise 
in  the  value  of  silver  as  compared  with  other  commodities. 
As  for  gold, — it  does  not  seem  to  have  fallen,  notwith- 
standing the  large  production  of  California  and  Australia. 
The  best  mode  of  remedying  the  difficulty  which  we  en- 
counter would  be  to  maintain,  compulsorily  in  France,  the 
relation  of  1  to  15  J  established,  or  rather  confirmed,  by 
the  legislation  of  the  year  11.  To  prevent  the  foreign  mar- 
ket from  exercising  in  this  respect  any  influence  on  the 
market  of  France,  it  is  only  necessary  to  put  a  duty  on 
the  exportation  of  silver,  and  to  establish  penalties  against 
the  heads  of  establishments  who  engage  in  or  connive  at 
the  trade.  Thus  the  conclusion  of  the  commission  is  that 
a  duty  should  be  laid  on  the  exportation  of  silver.  The 
commission  even  adds  that  it  should  be  a  liigJi  duty. 

4.  To  prohibit  the  exportation  of  silver ; 

5.  To  raise  the  duty  on  the  export  of  silver ; 

6.  To  lower  the  recognised  weight  and  fineness  ; 

7.  To  attack  directly  the  evil  in  its  material  and  immediate  source  by  a 
law  against  the  destruction  of  money,  assuming  that  the  ancient  laws  are  no 
longer  in  force ;  and  with  this  view  to  prohibit  the  selecting  and  purchasing 
of  coins -at  a  premium  for  the  purpose  of  melting. 

It  will  be  well  for  the  commission  to  examine  successively  these  differ- 
ent questions,  without  prejudice  to  those  which  may  arise  out  of  the  in- 
quiry. 

To  make  a  subsidiary  inquiry  whether  the  State  ought  not  to  reserve  to 
itself  the  exclusive  right  of  withdrawing  from  the  circulation  the  coins  bear- 
ing the  inscription  of  Charles  X.,  and  of  Napoleon  I.,  which  contain  a  quan- 
tity of  gold,  the  melting  of  which  constitutes  the  chief  benefit  to  the  refiners. 
What  measures  should  be  taken  to  carry  out  this  object  ? 
12 


178  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

Moreover,  the  better  to  impede  exportation,  the  selecting 
or  assorting  of  pieces  of  money  shall  be  an  act  punishable 
under  the  penal  law. 

Now,  if  there  be  anything  confirmed  by  history,  it  is 
that  the  efforts  of  governments  are  powerless  to  regulate 
the  value  of  gold  and  silver  in  relation  to  other  commod- 
ities, or  to  one  another,  and  that  they  are  equally  so  to 
compel  the  precious  metals  to  remain  in  the  interior  of  a 
State,  should  commerce  give  the  impulse  to  their  exporta- 
tion. This  twofold  observation  is  a  truism  which  one  re- 
grets to  have  to  revive.  If  there  be  in  political  economy 
anything  universally  acknowledged,  and  with  which  intel- 
ligent governments  are  in  accord,  it  is  that  the  precious 
metals  should  be  treated  as  merchandise,  and  left  to  the 
free  action  of  commerce,  including,  of  course,  the  liberty 
of  melting  and  all  that  appertains  to  it.  The  conclusion 
of  the  commission  is  right  in  the  teeth  of  these  well  ac- 
credited doctrines.  On  the  subject  of  the  currency,  we 
should  be  thus  embarking  with  all  sails  set  upon  the  waters 
of  the  ancient  regime,  when  other  civilised  countries,  led 
by  the  voice  and  example  of  France,  had  agreed  to  follow 
another  course. 

It  may  then  be  believed,  on  its  own  simple  announce- 
ment, that  the  unanimous  opinion  of  competent  men,  will 
be  against  its  recommendations.  They  rest,  in  fact,  on 
ideas  which,  thank  Heaven,  time  has  disposed  of. 

In  fine,  the  commission  proceeded,  as  will  be  seen,  in 
a  manner  to  deprive  of  all  authority  its  chief  proposal  for 
preventing  the  efflux  of  silver  by  means  of  a  duty  on  ex- 
portation. Before  coming  to  that  vote,  it  took  the  lauda- 
ble course  of  consulting  the  most  eminent  and  enlightened 
members  of  the  commercial  and  banking  interests,  eight 
of  whom,  of  the  highest  standing,  were  summoned  to  its 
presence.  They  were  examined  separately  upon  this 
special  subject,  and  the  question  was  presented  to  them  in 


OF    THE    FALL    OF    GOLD.  179 

every  form.  The  reiterated  testimony  of  these  eight  per- 
sons was  unanimous  :  they  persisted  in  repelling  the  idea 
of  a  duty  on  exportation.  Under  these  circumstances,  the 
decision  of  the  commission  is  presented  in  not  very  favour- 
able colours.  When  the  commission  decided  to  call  before 
it,  one  after  the  other,  eight  important  persons,  in  order 
to  consult  them  in  detail  on  a  given  subject,  that  is,  the 
propriety  of  stopping,  by  a  resort  to  the  material  ob- 
stacle of  a  custom-house,  the  export  of  silver,  it  was  be- 
cause it  felt  the  necessity  of  obtaining  further  enlighten- 
ment. But,  then,  how  could  it  decide  against  the  unani- 
mous and  very  decided  opinion  of  those  eight  counsellors 
whom  it  had  chosen  as  the  most  competent  to  edify  it  ? 

In  the  history  of  the  European  currencies,  the  com- 
mission would  have  found,  at  an  epoch  not  very  remote 
from  our  own  time,  a  precedent  which  seemed  almost 
expressly  made  for  it,  so  well  was  it  adapted  to  the  cir- 
cumstances in  which  it  deliberated,  and  especially  to  the 
position  of  the  very  question  which  it  had  accepted. 

Towards  the  commencement  of  the  eighteenth  century, 
the  monetary  system  of  England  underwent  a  perturba- 
tion, of  which  the  most  apparent  phenomenon  was  the 
same  as  has  been  repeated  in  France  since  the  discovery 
of  the  mines  of  California  and  Australia  :  the  silver  was 
either  sent  abroad  in  coins,  er  was  cast  into  the  crucible 
to  be  exported  in  bars,  and  gold  took  its  place  in  the  cir- 
culation. The  British  government,  alive  to  this  state  of 
things,  asked  the  advice  of  the  great  Newton,  who  was 
then  director  of  the  Mint,  and  who  brought  to  the  per- 
formance of  the  duties  of  his  office  the  same  care,  the 
same  acuteness  in  the  observation  of  facts,  and  the  same 
earnest  spirit  of  analysis  to  which  he  owed,  in  the  progress 
of  science,  the  admirable  discoveries  which  have  immor- 
talised his  name.  To  the  question  which  was  submitted 
to  him,  the  12th  August,  1717,  to  determine  the  causes 


180  MEASURES    TO   AVERT    THE   EVIL   EFFECTS 

of  the  exportation  of  silver,  and  to  indicate  a  mode  of 
putting  an  end  to  it,  Newton  replied,  the  21st  Septem- 
ber, in  terms  which  I  will  shortly  explain. 

At  that  time,  custom-house  duties  were  used  and 
abused  for  all  sorts  of  purposes,  and  every  kind  of  restric- 
tion, besides,  was  placed  on  the  industry  of  the  country, 
At  the  same  time,  the  extension  and  exaggeration  of  the 
penal  laws  were  expedients  to  which  authority  eagerly  re- 
sorted, and  which  were  very  convenient,  because  they 
relieved  them  from  the  necessity  of  maturely  studying 
the  questions  which  presented  themselves,  and  of  com- 
prehending the  origin  and  nature  of  things.  Newton 
would  have,  therefore,  been  excusable  if  he  had  recom- 
mended more  rigorous  acts  against  the  exportation  of 
silver,  and  the  application  of  a  severe  penalty  directed 
against  tokens  and  light  weights.  But  measures  of  this 
kind  were  not  those  towards  which  a  man  like  Newton 
directed  his  mind,  and  in  England  already  more  intelli- 
gent traditions  had  established  themselves,  more  care  for 
public  opinion,  and  more  respect  for  human  liberty,  in  its 
relations  with  industry,  as  well  as  with  the  other  aspects 
of  civilised  life.  Thus,  then,  proceeded  Newton  : — 

After  having  passed  in  review  the  value  of  gold  and 
silver  in  the  different  States,  and  having  shown  that  in 
England  the  legal  relation  gave  too  much  to  gold  to  the 
detriment  of  silver,  he  argued  in  the  following  manner  :— 
If  silver  leaves  the  shores  of  England  in  crowns  or  in  in- 
gots, the  produce  of  coins  remelted,  and  gives  place  to 
gold,  it  is  because  the  value  which  the  monetary  legisla- 
tion assigns  to  it,  in  relation  to  gold,  is  not  correct.  The 
law  supposes,  in  fact,  that  the  relation  between  gold  and 
silver  is  that  of  one  to  a  little  more  than  15J,*  whilst  in 

*  Newton  says  that  1  pound,  troy  weight,  of  fine  gold  is  worth  legally 
15  pounds,  6  ounces,  11  dwts.,  and  5  grains  of  silver:  The  pound  troy  is 
enly  12  ounces. 


OF  THE   PALL    OP    GOLD.  181 

the  general  market  of  Europe  it  is  barely  1  to  15*  That, 
let  the  legal  relation  between  gold  and  silver  be  re-estab- 
lished upon  the  true  basis,  and  by  that  act  we  shall  have 
destroyed  the  temptation  to  export  from  England  silver 
in  preference  to  gold.  To  effect  this,  nothing  more  need 
be  done  than  to  withdraw  10  or  12  pennyweights  from  the 
value  assigned  to  the  guinea  in  silver  money.  For  greater 
prudence,  Newton  advised  the  reduction  to  be  made  in 
two  operations,  and  to  commence  by  an  abatement  of  six 
pennyweights.f 

The  note  of  Newton  is  a  model  of  logic  and  pre- 
cision. We  recognise  in  it  that  firmness  and  justness 
of  mind  which  laid  hold  of  the  foundation  of  questions, 
threw  aside  accessories  and  extraneous  or  indifferent  ob- 
jects, and  went  straight  to  the  end  in  view.  The  reason- 
ing of  his  note  applies  word  for  word  to  the  problem  which 
Our  Commission  had  to  solve.  Here  is  in  effect  what 
may  be  said  in  our  day  : — for  several  years,  silver  has 
been  leaving  the  shores  of  France,  in  crowns,  or  in  ingots, 
the  produce  of  coins  remelted,  and  giving  place  to  gold, 
because  the  value  which  the  monetary  laws  assign  to  it 
in  relation  to  gold  is  not  correct.  The  law  supposes,  in 
fact,  that  the  relation  between  gold  and  silver  is  that  of 
1  to  15J-,  whilst  in  the  general  market  of  Europe,  it  is 
sensibly  less.  Let  the  legal  relation  between  gold  and 
silver  be  re-established  upon  the  true  basis,  and  by  that 
act  we  shall  have  destroyed  the  temptation  to  export  from 
France  silver  in  preference  to  gold.  To  effect  this, 
nothing  more  need  be  done  than  to  withdraw  from  the 
value  attributed  to  pieces  of  gold  in  silver  money  a  given 

*  Newton  says  14%  to  15. 

f  This  report  of  Newton  has  been  reprinted  in  a  volume  of  documents 
upon  the  currency,  which  has  been  published  by  the  London  Political  Econ- 
omy Club,  to  which  I  have  previously  referred. — Select  Tracts  on  Money, 
p.  2Y4. 


182  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

quota,  certain  to  retouch  periodically  this  relation,  so  that 
it  shall  always  be  in  harmony  with  the  real  state  of  things. 
I  put  aside  here  the  question  whether  we  should  render 
the  monetary  system  of  France  more  conformable  to  prin- 
ciple, and  whether  the  application  of  this  mechanism  to 
the  gold  coins  would  not  be  better  effected  by  replacing 
the  quantities  of  metal  which  constitute  the  coins  in  usage, 
by  others  which  contained  a  round  number  of  grammes,  of 
five  or  ten,  for  example. 

It  is  much  to  be  regretted  that  a  commission  which, 
deliberating  in  1858,  at  Paris,  the  centre  of  European 
intelligence,  and  the  metropolis  of  the  civilized  world,  as 
we  are  in  the  habit  of  calling  it,  should  have  refused  to 
adopt  the  opinion  of  so  great  an  authority  as  Newton,  so 
competent  in  the  matter, — an  opinion  put  forth  under 
circumstances  from  which  what  is  passing  in  our  day  in 
France  respecting  silver  money  might  have  been  borrowed, 
and  which  was,  moreover,  sanctioned  forthwith  by  govern- 
ment at  the  instance  of  parliament.*  It  is  difficult  to 
conceive  how,  repudiating  such  an  authority,  this  commis- 
sion should  have  permitted  itself  to  draw  its  inspiration 
from  the  edicts  of  the  ancient  regime  upon  money,  which 
are  monuments  of  ignorance  and  despotism. 

*  The  reduction  of  six  pennyweights  per  guinea  was  made  before  the 
end  even  of  the  year  1717,  by  royal  proclamation. 


OF    THE    FALL    OF    GOLD.  183 


CHAPTER    VII. 

OF  VARIOUS  ACTS  WHICH  THE  LEGISLATION  OF  THE  ANCIENT  EEGIME 
UPON  MONEY  TEEATED  AS  CEIMES,  AND  WITH  EEGAED  TO  WHICH 
SOME  PEESONS  OF  OUR  DA.Y  PEOPOSE  TO  ESTABLISH  PENALTIES. 
-SELECTING,  AND  MELTING  ;  TEADE  IN  COINS  ;  EXPOETATION. 

IN  the  course  of  this  work  I  have  already  offered  some 
explanations  of  the  various  operations  on  the  currency 
which  the  ancient  regime  punished  with  the  utmost 
rigour.  This  scaffolding  of  penal  laws,  pronouncing 
almost  in  every  article  the  pain  of  death  or  the  galleys, 
accompanied  with  confiscation  and  fines,  generally  of 
enormous  amount,  was  overturned,  after  the  Revolution, 
by  the  precise  dispositions  of  the  laws  and  ordonnances,  or 
implicitly  by  the  effect  of  the  new  direction,  eminently 
conformable  to  reason,  as  well  as  to  the  experience  of  ages, 
which  the  legislation  upon  money  has  taken  since  1789. 

In  the  opinion  of  the  moderns, — an  opinion  which  has 
passed  into  the  laws  of  the  great  civilised  States,  gold 
and  silver  are  commodities  which,  in  exchanges,  pass  for 
the  value  which  belongs  to  them.  The  trade  in  these 
metals  is  free,  like  that  of  other  merchandise.  A  piece 
of  coined  money  is  a  certified  ingot,  as  to  its  weight  and 
fineness, — and  the  certificate  consists  in  the  impressions 
which  it  has  received.  Between  this  sort  of  ingot  and  an 
ordinary  ingot,  the  difference  of  value  is  restricted  to  the 
expense  which  attends  the  affixing  of  the  certificate,  in- 
cluding the  previous  operation  by  which  the  metal  is 
brought  to  the  legal  fineness,  and  these  expenses  are  very 
trifling.  Not  only  is  the  trade  in  the  precious  metals, 
whether  coined  or  in  ingots,  perfectly  free  in  the  interior 
of  States  ;  but  it  has  been  acknowledged  even  in  countries 
which  have  maintained  a  very  restrictive  system  of  interna- 
tional commerce — France  is  in  this  predicament, — that 


184  MEASURES    TO    AVERT    THE    EVIL   EFFECTS 

the  importation  and  exportation  of  gold  and  silver,  both 
in  coins  and  ingots,  ought  to  be  perfectly  free.  Inasmuch 
as  the  precious  metals,  whether  coined  or  not,  are  mer- 
chandise ;  it  follows,  that  the  private  individual  who  has 
received  a  piece  of  money  can  do  with  it  what  he  will, 
and,  consequently,  can  melt  it.  The  only  use  of  it  which 
is  interdicted  to  him  is  to  put  it  in  circulation  again  after 
having  diminished  its  weight  by  "  sweating,"  or  otherwise, 
because  the  quantity  of  metal  which  it  contains  is  no 
longer  consistent  with  its  impression,  and  to  pass  it  to 
another  for  legal  weight  would  be  a  deception  as  to  the 
quantity  of  merchandise,  or.  indeed,  a  sort  of  forgery  of  a 
public  document.  In  a  word,  the  modern  doctrine  on  the 
subject  of  money — a  doctrine  accepted  not  only  in  the 
writings  of  philosophers,  but  also  in  the  codes  of  the  great 
civilised  States, — is  in  almost  every  way  the  very  opposite 
of  the  ideas  of  the  ancient  regime. 

However,  the  Moniteur,  about  a  year  since,  contained 
an  announcement  which  would  seem  to  indicate  that  the 
government  considered  as  still  in  force  the  laws  and  edicts 
of  the  ancient  regime  relative  to  money,  and  especially 
against  the  following  operations  : — 

1st.  Picking,  or  selecting,  which  some  persons  think  to 
stigmatise  under  the  affected  name  of  billonage  or 
trebucJiage; 

2nd.  Melting  ; 

3rd.  Buying  and  selling  at  a  premium. 

Proceedings  were  actually  commenced,  at  the  end  of 
the  year  1857,  against  some  of  the  principal  money- 
changers of  Paris,  who  resorted,  without  concealment,  to 
these  practices.  It  is  true,  that  the  proceedings  were 
almost  instantly  suspended  ;  doubtless,  because  the  gov- 
ernment, after  a  more  careful  inquiry,  found  that  the 


OF    THE    FALL    OF    GOLfc.  185 

statements  inserted  in  the  Moniteur  were  very  doubtful. 
But  the  commission  appointed  in  1857  by  the  minister  of 
finance,  appears  to  have  been  inclined  to  give  some  va- 
lidity to  the  revived  pretensions  of  the  ancient  regime,  of 
which  the  official  journal  had  made  itself  the  echo.  It 
alluded  to  the  point  whether  the  old  Draconic  laws,  which 
were  in  existence  prior  to  1789,  were  still  in  force,  without 
solving  the  question,  and  it  expressed  itself  in  severe 
terms  upon  tho  whole  of  the  operations  referred  to  above  ; 
and  it  has  been  seen  in  the  preceding  chapter  that,  with 
regard  to  some  of  them,  it  recommended  the  enactment  of 
penalties  if  none  already  existed.  With  such  tendencies, 
avowed  and  patronised  by  an  important  commission,  a 
few  more  observations  respecting  these  operations  may 
not  be  superfluous. 

Let  us  take  successively  the  acts  in  question  ;  and 
first,  let  us  speak  of  billonage  or  trebuchage,  which  we 
will  call  by  the  modern  and  more  simple  and  significant 
name  of  picking  or  selecting:  we  will  speak  of  it  without 
separating  it  from  the  remelting,  which  is  the  object  for 
which  the  coins  are  generally  selected. 

The  reader  has  seen,  above,  that  the  "  picking,"  such 
as  was  begun  to  be  practised  in  France  on  a  large  scale, 
about  1825  or  1830,  had  for  its  object  to  withdraw  from 
the  circulation,  for  profitable  use,  the  pieces  of  5  francs, 
which,  owing  to  the  imperfection  of  the  ancient  processes 
both  for  proportioning  the  quantity  of  silver,  and  for  ex- 
tracting the  gold  from  the  ingots  of  this  metal,  contain- 
ed a  value  superior  to  5  francs.  We  think  we  have 
shown  that  this  special  case  of  selecting,  dating  about 
thirty  years  ago,  and  of  which  we  are  now  speaking,  was 
not  merely  an  operation  licit  in  itself,  but  useful  to  soci- 
ety ;  and  that  apart  from  these  accidental  and  temporary 
circumstances,  and  with  money  well  made,  that  is,  where 
the  standard  of  weight  and  fineness  fixed  by  law  had 


186  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

been  observed,  the  practice  of  "  picking  "  would  have  been 
impossible  ;  from  whence  it  follows  that,  if  the  government 
wishes  to  prevent  this  practice,  it  has  the  power  of  doing 
so  ;  it  has  only  to  take  care  to  fulfil  its  duty,  which  is 
to  see  that  the  money  is  struck  in  conformity  with  the 
law. 

Nevertheless,  the  advocates  of  the  resurrection  of  the 
edicts  of  the  ancient  regime  on  the  coinage,  with  the  view 
of  justifying  the  severities  which  they  call  for  against 
"  picking "  and  melting  the  coins,  have  represented  that 
these  operations  are  nothing  less  than  the  perpetration  of 
a  robbery,  to  the  prejudice  of  the  State  ;  for,  according  to 
them,  and  one  of  the  organs  of  this  opinion  has  said  as 
much  in  round  terms,  money  is  in  a  certain  sense  public 
property,  from  which  they  draw  the  logical  consequence 
that  a  private  individual  can  not  touch  it  without  com- 
mitting a  fault  or  crime.  Nay,  more,  these  acts  would 
constitute  the  crime  of  treason,  inasmuch  as  they  would  be 
a  want  of  respect  for  the  work  of  the  State.  Such  words 
have  actually  been  employed. 

How,  and  in  what  respect,  can  money  be  public  prop- 
erty ?  I  have  exchanged  my  merchandise,  say,  for  ex- 
ample, the  hectolitre  of  corn,  for  another  commodity,  which 
shall  be  100  grammes  of  silver  of  nine- tenths  fineness,  and 
these  100  grammes  consist  of  four  discs  of  25  grammes 
each,  commonly  called  5-franc  pieces.  Why  should  the 
100  grammes  of  silver  be  public  property  more  than  the 
hectolitre  of  corn  ?  Is  it  because  the  public  has  need  of 
discs  making  100  grammes  of  metal  ?  But  it  seems  to 
me  that  the  public  has  greater  need  of  the  corn.  Is  it 
because  these  discs  have  been  by  the  care  of  the  State 
made  of  a  certain  weight  and  fineness,  and  certified  as  such 
by  the  impressions  stamped  on  the  obverse  and  reverse  ? 
But  the  very  moderate  cost  of  these  operations  has  been 
paid  to  the  directors  of  the  mints  who  have  performed 


OF    THE    FALL    OF    GOLD.  187 

them  ;  the  private  individual  who  brought  the  ingots,  from 
which  the  discs  were  produced,  to  be  coined,  paid  the 
coiner.  Besides,  the  State  has  also  certified  the  hectolitre 
of  corn,  since  it  has  verified  the  measure  through  which 
the  corn  has  passed.  If  the  piece  of  money  which  I  carry 
in  my  pocket  is  in  a  certain  sense  public  property,  or  the 
property  of  the  State,  there  is  no  form  of  riches,  no  spe- 
cies of  property  which  is  not  in  the  same  predicament  ; 
for  there  is  none  which  does  not  contribute  to  the  national 
prosperity,  to  assure  our  existence  or  subsistence,  and 
which  has  not  more  or  less  the  guarantee  of  the  State,  were 
it  only  by  the  public  force  and  the  courts  of  law  which 
check  or  prevent  deception  in  the  quantity  and  quality  of 
merchandise.  This  would  be  especially  true,  in  a  certain 
sense,  of  landed  property,  which,  in  fact,  by  the  taxation 
which  it  supports,  may  be  considered  up  to  a  certain 
point  as  belonging  to  the  State.  Inasmuch  as  the  land 
pays  on  an  average  (in  France)  the  eighth  of  its  revenue 
for  income  tax,  it  may  be  said  to  that  extent  to  be  the 
property  of  the  State.  If,  then,  it  were  finally  admitted 
that  money  is  in  a  certain  sense  public  property,  and  that, 
in  consequence,  those  who  receive  it  in  payment  are  pro- 
hibited from  disposing  of  it  as  they  please,  the  writers  who 
at  all  times,  and  under  all  circumstances,  are  so  fond  of 
appealing  to  authority,  would  have  no  great  difficulty  in 
proving  that  the  State  is  the  co-proprietor  of  every  real 
estate,  and  that  the  assent  of  the  government  is  necessary 
before  any  landowner  can  alienate  or  even  improve  his 
property.  This  lands  us  in  simple  communism.  Nor 
ought  it  to  surprise  us,  if  we  commence  with  a  programme 
in  which  are  inscribed  the  inventions  of  the  Kegency,  the 
reminiscences  of  the  system  of  Law,  and  the  ordinances  of 
the  worst  days  of  Louis  XIV.,  a  prince  who,  if  he  exhibit- 
ed a  grandeur  of  genius  and  character,  was  still  an  un- 
mitigated despot,  and  one  who  showed  less  respect  for  the 


188  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

rights  of  property  than  any  other  sovereign  who  has  occu- 
pied the  throne  of  France.* 

A  piece  of  money  in  the  hands  of  its  owner  is  his  pri- 
vate property  as  much  as  his  field,  his  furniture,  his  food, 
or  his  clothing.  The  holder  may  cast  it  into  the  river  ;  how 
much  more  reasonably,  then,  may  he  be  entitled  to  select 
from  the  hundred  5  franc  pieces,  which  he  has  in  his  cash- 
box,  ten  pieces  to  be  melted,  if  such  should  be  his  interest 
or  pleasure.  It  were  to  subvert  all  sound  doctrines  re- 
specting property,  to  admit  that  the  State  retains  any 
right  whatever  over  money,  excepting  it  be  to  require  that 
it  should  constantly  possess  its  prescribed  weight  and 
value  ;  because,  money  being  a  measure,  as  well  as  a  mer- 
chandise, it  is  the  duty  of  the  State  to  see  that  it  remains 
in  conformity  with  its  type,  the  same  as  the  metre,  or  the 
gramme,  or  the  litre. 

As  to  the  imputation  of  a  want  of  respect  for  the  icork 
of  the  State,  with  the  best  possible  intention,  I  cannot 
understand  it ;  but  it  seems  to  me  that  they  who  put  forth 
this  grievance  would  be  better  employed  in  considering  the 
respect  due  to  the  rights  of  private  property.  Are  they 
to  be  understood  to  mean  that  coins  ought  to  be  assimi- 
lated to  public  monuments,  and  that  he  who  degrades 
them  by  throwing  them  into  the  crucible,  deserves  the 
same  punishment  as  the  person  who  should  have  muti- 
lated a  statue  in  a  public  place  ?  But  there  is  nothing  in 
common  between  a  piece  of  money,  which  is  only  a  cer- 

*  In  one  of  the  works  which  were  published  by  the  members  of  the 
Academy  of  Moral  and  Political  Sciences,  in  1848,  during  the  commotion 
caused  by  the  Revolution  of  the  24th  February,  M.  Troplong  brought  out 
conspicuously  the  communistic  character  of  the  opinions  of  Louis  XIV.  on 
property,  and  the  contrast  which  they  present  to  the  ideas  which  formed 
the  basis  of  the  Code  Napoleon.  On  this  subject  the  writings  themselves 
of  Louis  XIV.  may  be  consulted.  Some  very  significant  extracts  will  be 
found  in  M.  Henry  Martin's  History  of  France,  Vol.  XIII.,  p.  259,  edition 
of  3858. 


OF    THE    FALL    OF    GOLD. 

tified  ingot,  and  a  statue,  which  the  public  gratitu-de  may 
have  erected  to  a  great  man  ;  the  artistic  portion  is  quite 
an  accessory  to  the  coin,  and  moreover  the  piece  of  money 
is  private  property,  whilst  the  statue  belongs  to  the  com- 
munity. 

But,  perhaps,  in  alleging  that  to  melt  the  money  is  to 
show  a  want  of  respect  for  the  work  of  the  State,  it  is 
meant  that  as  it  bears  the  effigy  of  the  prince,  to  destroy 
that  effigy  would  be  an  outrage  on  the  sovereign.  This  view 
would  have  the  disadvantage  of  being  borrowed  from  the 
official  doctrines  of  the  evil  days  of  the  Koinan  Empire, 
when  the  Emperor  was  the  object  of  a  hypocritical  idol- 
atry, and  when  the  cases  of  high  treason  were  multiplied 
indefinitely.  But  if  it  be  a  crime  to  destroy,  by  remelting 
a  piece  of  money,  the  effigy  or  the  armorial  bearings  of  a 
prince,  it  will  also  be  a  crime  to  tear  a  stamp  which  shall 
represent  the  one  or  the  other  ;  and  to  be  indictable  at  the 
assizes,  it  will  suffice  to  have  thrown  into  the  fire  an  old 
sheet  of  stamped  paper. 

The  pieces  of  money  which  pass  through  the  hands  of 
the  State,  are,  during  the  time  that  they  remain  in  the 
possession  of  the  receivers,  public  property,  or  property  of 
the  State.  The  State  has  then  clearly  the  right  to  make 
such  use  of  them  as  the  public  authorities  shall  have 
deemed  advisable  ;  and  thus,  for  example,  after  1825,  it 
might  have  subjected  the  5  franc  pieces,  with  which  the 
public  treasuries  were  gorged,  to  the  operation  of  re- 
fining, and  so  have  secured  the  profit  which  has  fallen  into 
the  hands  of  the  refiners.  It  may  even  be  observed  that 
the  movement  of  the  taxes  brought  naturally,  and  without 
effort,  an  immense  number  of  pieces  of  5  francs  into  the 
hands  of  the  agents  of  the  State,  whereas  the  refiners  were, 
and  are,  obliged  to  procure  them  at  much  expense,  and 
even  by  the  payment  of  premiums.  In  this  point  of  view, 
the  operation  would  have  been  easier  for  the  State  than 


190  MEASURES   TO   AVERT    THE   EVIL   EFFECTS 

any  one  ;  *  but  even  in  the  very  narrow  point  of  view  as 
to  the  profits  to  he  derived  from  the  refining  of  the  5  franc 
pieces,  to  extract  the  small  excess  of  silver,  and  the  mi- 
nute proportion  of  gold  which,  thirty  years  ago,  were  left  in 
them,  the  right  of  the  State  does  not  exclude  that  of  indi- 
viduals. The  one  and  the  other  occupy  similar  ground  ; 
they  have  the  same  point  of  departure  and  the  same  goal. 
They  co-exist  for  the  same  reason,  and,  under  this  aspect 
as  under  every  other,  there  is  no  ground  for  saying  that 
the  operation  of  "  selecting"  and  remelting  is  a  robbery 
perpetrated  to  the  prejudice  of  the  State. 

But  it  is  insisted  that,  if  private  individuals  are  free  to 
select  the  coins,  so  as  to  separate  the  heaviest  for  remelt- 
ing them,  the  light  pieces  only  will  be  left,  and  the  cur- 
rency will  be  vitiated.  To  console  those  persons  who  feel 
this  apprehension,  it  is  only  necessary  to  remark,  that  with 
money  properly  made,  that  is  to  say  where  the  coins  shall 
be  in  conformity,  both  as  to  weight  and  fineness,  with  the 
requirements  of  the  law  of  the  year  11,  the  speculation  of 
"  selecting  "  and  remelting  is  no  longer  to  be  feared,  since 
those  who  undertook  it  would  assuredly  be  ruined.  There 
is  reason  to  believe  that,  at  the  present  time,  thanks  to 
the  perfection  at  which  the  mechanical  and  chemical  arts 
have  arrived,  the  limits  of  weight  and  fineness  might  be 
diminished — especially  the  former, — which  would  still 
further  tend  to  render  the  operation  impossible.  Doubt- 
less, when  the  coins  have  circulated  for  a  long  time,  they 
lose  a  sensible  fraction  of  their  weight.  The  careful  ex- 
periments of  Messrs.  Dumas  and  De  Colmont,  prove  that 
a  5  franc  piece,  which  has  passed  from  hand  to  hand  for 
a  century,  will  have  lost  a  gramme  and  a  half,  making 

*  The  administration,  however,  refused  to  embark  in  the  undertaking, 
when  advantageous  proposals  were  addressed  to  it,  for  taking  the  place  of 
the  private  refiners,  and  refining  the  5  franc  pieces  paid  in  for  taxes.  These 
proposals  were  made  several  years  previously. 


OF    THE    FALL    OF    GOLD.  191 

about  3  centimes  ;  thus  the  private  individual,  who  wished 
to  export  the  silver  coins  after  having  remelted  them, 
would  avoid  the  old  pieces,  and  would  make  a  selection  of 
those  only  which  were  new  and  almost  perfect.  In  this 
way,  it  is  true  that,  if  the  government  has  taken  no  pre- 
caution for  withdrawing  the  coins  which  are  worn  with 
time,  selecting  and  remelting  will  have  the  effect  of  leaving 
only  those  pieces  which  are  of  diminished  weight  in  circu- 
lation. But  does  it  follow  that,  to  prevent  this  process  of 
vitiating  the  currency,  the  best  mode  is  to  invent  new  pen- 
alties, or  to  revive  the  old  edicts  against  "  selecting  "  and 
remelting  ? 

It  is  not  necessary  to  resort  to  the  argument  that  the 
power  of  "  selecting"  and  remelting  pieces  of  money  is  the 
natural  and  necessary  corollary  of  the  rights  of  property. 
Apart  from  this  consideration,  however  decisive,  it  would 
be  easy  to  cite  a  score  of  cases  in  which  the  operations  of 
"  selecting"  and  remelting  are  of  palpable  convenience, 
and  of  an  evidently  legitimate  character.  A  jeweller 
wishes  to  make  use  of  some  of  the  silver  money  in  circu- 
lation to  meet  the  necessities  of  his  business.  It  would 
be  unreasonable  to  interdict  him  from  taking  in  preference 
the  heaviest  coins  ;  and,  however  much  it  might  be  for- 
bidden, he  could  not  be  prevented  from  doing  so.  The 
merchant  who  wishes  to  discharge  a  debt  abroad  with  sil- 
ver specie,  will  in  the  same  manner  prefer  the  coins  which 
are  of  full  weight,  because  the  foreigner  is  too  shrewd  to 
accept  in  any  other  way  than  by  weight  the  pieces  of 
money  that  are  sent  across  the  frontiers. 

In  truth,  we  are  dwelling  too  long  on  these  ideas, 
which  public  opinion  has  already  condemned,  and  which 
have  for  ever  disappeared  from  the  codes  of  all  civilised 
States.  We  know  what  was  the  origin  in  former  times 
of  the  interdicts  levelled  against  the  melting  of  money, 
and  the  "  selecting"  which  usually  preceded  it.  The 


192  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

spirit  of  cupidity  and  spoliation  dictated  that  prohibition 
in  times  of  ignorance,  and  it  was  afterwards  perpetuated 
under  the  financial  pressure  to  which  unscrupulous  gov- 
ernments have  been  constantly  exposed. 

Let  us  call  to  mind  a  remark  which  has  been  made, 
that  to  prohibit  the  "  selecting"  or  remelting  of  coins,  be- 
came a  useless  severity  from  the  moment  that  the  expor- 
tation of  money  was  permitted.  It  was  thenceforth  only 
necessary  to  transport  the  specie  across  the  frontier  to  be 
enabled  to  carry  out  the  remaining  process  with  impunity. 
There  is,  then,  every  kind  of  motive  why  the  laudable 
idea  of  maintaining  the  integrity  of  the  French  coinage, 
and  its  conformity  with  the  type  determined  by  the  law, 
should  not  be  diverted  into  a  question  of  proceeding  with 
rigour  against  the  operations  of  ."  selecting"  and  melting. 
It  is  otherwise  that  it  must  be  realised,  and  it  is  in  an- 
other direction  that  the  problem  must  be  solved.  To  carry 
on  the  government  with  a  penal  code,  is  consistent  enough 
with  barbarous  nations,  where  the  ruling  power  practises 
unmitigated  despotism  at  all  times,  and,  between  two 
courses,  prefers  that  which  is  the  most  convenient  for  its 
idleness  and  ignorance  ;  but  it  is  not  becoming  to  those 
civilised  States  where  the  government  professes  to  respect 
their  citizens  in  their  persons  and  property.  With  civil- 
ised nations,  the  penal  code  should  reserve  its  severities 
for  acts  which  the  conscience  condemns  ;  but  it  must  not 
be  allowed  to  strike  with  the  sole  object  of  sparing  the 
government  the  vigilance  and  care  which  are  among  the 
number  of  its  imperative  duties. 

The  case  thus  stated,  where  is  the  difficulty  which  we 
shall  now  encounter,  and  whence  does  it  arise  ?  With 
time,  an  inequality  may  and  must  inevitably  manifest 
itself  between  pieces  of  money  of  the  same  denomination. 
Some,  which  are  old  and  worn  with  long  circulation,  will 
weigh  less  than  the  others  which  are  new,  and  it  is  feared 


OF    THE    FALL    OF    GOLD.  193 

that  if,  in  these  circumstances,  the  practice  of  "  select- 
ing" be  permitted,  private  individuals  will  make  a  profit 
out  of  the  withdrawal  of  the  latter,  so  that  the  former 
only  will  remain  in  circulation.  Very  well.  It  is  well  to 
foresee  the  fact,  for  history  attests  that  it  has  frequently, 
if  not  always,  occurred.  But  it  is  also  proper  to  ask  if 
the  motive  for  which  private  individuals  put  aside  coins 
of  full  weight,  is  not  precisely  the  existence  in  juxtaposi- 
tion of  the  pieces  of  light  weight  which  the  vicious  or  in- 
complete wording  of  the  law,  or  its  unwarrantable  inter- 
pretation, would  assimilate  to  coins  of  full  value.  The 
cause  of  the  evil  is  this  favour  which,  in  contempt  of  prin- 
ciple, it  is  attempted  to  accord  to  coins  of  light  weight. 
Let  the  government  and  the  legislator,  acting  up  to  their 
mission,  banish  from  the  circulation  these  defective  coins, 
or  authorise  them  to  pass  in  payments  for  only  what  they 
are  worth,  and  from  that  moment  no  one  will  have  any 
further  interest  in  separating  the  pieces  of  full  weight.  In 
a  word,  the  true  solution,  that  which  does  violence  to  no 
one,  that  which  troubles  no  citizen  in  his  industry  and 
liberty,  is  either  to  withdraw  the  light  coins,  or  to  declare 
by  law  that  they  shall  only  be  taken  in  payments  accord- 
ing to  their  weight. 

It  may  not  be  useless  here  to  remark,  that  in  conform- 
ity with  what  has  been  done  in  other  countries,  where  the 
law  has  declared  that  light  coins  should  only  be  taken  for 
their  weight,  it  would  be  well,  in  case  such  a  measure 
should  be  adopted  in  France,  to  admit  that,  in  small  pay- 
ments up  to  a  certain  sum,  the  pieces  should  pass  for 
their  full  nominal  value.  The  English  law  of  1774  upon 
the  silver  currency  fixed  this  limit  at  £25  sterling  (about 
630  francs).  We  might,  by  analogy  in  France,  fix  the 
limit  at  500  to  600  francs.  It  seems,  however,  that  it 
would  be  better  to  name  a  still  lower  sum,  100  francs,  for 
example. 

13 


194  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

As  a  general  proposition,  the  withdrawal  of  the  light 
coins  would  he  easy.  We  know  that  in  the  United  King- 
dom, the  Bank  of  England  takes  charge  gratuitously  of 
this  service,  and  supports  the  expense.  She  weighs  a]l 
the  money  which  the  movement  of  trade  brings  to  her 
counter.  For  this  purpose  she  has  a  machine  which  effects 
the  object  very  skilfully.  Similar  machines  might  be 
used  in  France,  at  the  bank  as  well  as  in  its  branches, 
and  in  the  offices  of  the  principal  Keceivers  General. 
They  would  thus  intercept  every  piece  which  should  be 
below  the  standard  weight.  If  a  machine  of  this  kind 
were  kept  at  every  mint,  for  the  verification  of  the  coins 
which  issue  from  the  balance,  the  necessity  for  the  estab- 
lishments which  we  have  just  enumerated  would  be  nota- 
bly simplified.  The  expedient  which  consists  in  deciding 
legislatively  that  coins  should  only  be  received  by  weight 
in  payments  beyond  a  certain  sum  is  quite  practical,  and 
has  for  authority  many  precedents.  This  would,  perhaps, 
be  in  itself  sufficient.  However,  for  permanent  exactness 
in  the  monetary  system,  which  is  important  in  the  rapid- 
ity of  transactions,  it  would  be  well  to  combine  this  act 
with  the  withdrawal  of  the  light  coins,  by  establishing 
weighing  machines  in  the  public  establishments  through 
which  the  money  flows. 

Experience,  in  all  nations,  has  shown  the  impossibility 
of  maintaining  in  parallel  circulation,  under  the  same  de- 
nomination, coins  of  full  weight  and  fineness,  and  pieces 
of  inferior  value,  because  it  is  contrary  to  the  very  nature 
of  things  to  which  we  must  all  conform  ourselves.  The 
light  pieces  have  always  and  everywhere  expelled  those  of 
full  weight  and  fineness,  and  to  keep  the  latter  in  circu- 
lation it  has  been  always  necessary  to  throw  the  others 
into  the  crucible  of  the  Mint,  or  to  give  them  a  circula- 
tion according  to  their  value.  On  this  point,  the  annals 
of  England  may  be  consulted  with  peculiar  interest. 


OF    THE    FALL    OF    GOLD.  195 

In  France,  at  the  present  time,  the  withdrawal  of  the 
light  coins,  which  have  accumulated  since  the  year  11, 
would  only  be  a  serious  operation  as  regards  the  5  franc 
pieces,  and  we  may  form  an  approximate  estimate  of  what 
it  would  cost  so  far  as  they  are  concerned.  The  ivear  has 
not  yet  had  time  to  be  very  considerable  ;  the  French 
and  foreign  refiners  have  withdrawn  from  the  circulation, 
from  the  motives  already  explained,  the  chief  part  of  the 
coins  anterior  to  1825,  and  even  to  1830.  The  oldest 
pieces  have,  therefore,  been  hardly  a  quarter  of  a  century 
in  circulation  ;  the  corresponding  loss  would  not  be  more 
than  eight  centimes  per  piece.  Upon  the  sum  of  a  mil- 
liard (£40,000,000),  which  would  have  the  average  cir- 
culation of  about  fifteen  years,  the  loss  would  be  48,000 
kilogrammes  or  9,600,000  francs  (£384,000).  There 
would  also  be  the  expense  of  melting  and  recoining,  which, 
according  to  the  tariff  of  the  Mint,  would,  supposing  it  to 
be  general,  amount  to  7,500,000  francs  (£300,000). 
We  thus  reach  a  total  expense  of  17,100,000  francs 
(£684,000).  If  the  mass  of  5  franc  pieces  remaining  in 
France  at  this  time,  amount,  as  some  persons  suppose,  to 
1,500,000,000  francs  (£60,000,000),  the  expense  would 
amount  to  25, 650,000  francs  (£1,026,000),  always  with 
the  supposition,  evidently  forced,  that  the  recoinage  would 
be  general.  The  sum  is  large  assuredly,  but  the  advan- 
tage of  having  thenceforth  a  sound  currency  is  well  worth 
it.  These  charges  would  be  spread  over  two  operations, 
or  three  at  the  utmost,  because  in  cases  of  this  kind  suc- 
cess depends  on  rapidity  of  movement.  It  must  be  added 
that  the  sum  of  25,650,000  francs  is  the  maximum,  which 
for  several  reasons  would  never  be  reached.  It  is  likely 
that  for  an  undertaking  so  vast,  the  State  would  come  to 
an  agreement  with  the  directors  of  the  Mint  for  a  reduc- 
tion of  the  tariff.  In  the  next  place,  the  coins  of  a  date 
anterior  to  1825  and  1830,  which  are  still  in  circulation, 


196  MEASURES   TO   AVERT    THE    EVIL   EFFECTS 

would  yield  a  profit  rather  than  a  loss.  And,  besides., 
some  of  the  pieces  would  be  found  above  the  legal  weight 
and  fineness,  and  consequently  would  not  require  to  be 
returned  to  the  crucible.  - 

Under  William  III.,  a  century  and  a  half  since,  par- 
liament voted  eagerly  £1,200,000  sterling  to  re-establish 
on  a  sound  basis,  that  is  in  conformity  with  its  type,  the 
silver  money  which  had  been  worn  by  circulation  or  exces- 
sively "  sweated."  Weight  for  weight,  £1,200,000  would 
'  make  30,000,000  francs  of  our  money  ;  but  taking  into 
account  the  greater  value  of  silver  at  that  time,  it  would 
be  equal  to  70  or  75  millions  of  francs  of  our  day. 

A  word  or  two  upon  the  purchase  and  sale  of  coins  at  a 
premium.  Latterly,  some  persons  have  made  violent  ef- 
forts to  incriminate  those  who  are  engaged  in  these  opera- 
tions. The  vehemence  with  which  they  are  attacked  is 
hardly  explicable,  inasmuch  as  they  follow  a  commercial 
pursuit,  that  of  the  money-changer,  perfectly  understood, 
and  duly  licensed.  In  every  age  and  in  all  countries  this 
commerce  has  existed,  because  it  is  useful  and  necessary, 
and  because  it  is  not  condemned  by  any  of  the  principles 
on  which  society  is  founded.  Ignorant  governments  have 
often  tried  to  subject  it  to  unjust  restrictions,  opposed  to 
the  public  interest,  but  they  have  always  failed  in  their 
efforts.  In  France,  previous  to  1850,  every  one  who  went 
on  a  journey  bought  gold  at  the  changers  at  a  premium  of 
about  10  or  20  centimes  per  piece  of  20  francs  :  neither 
justice  nor  the  government  frowned  on  these  operations  ; 
everybody  admitted  that  they  were  quite  practical  and 
legitimate,  both  on  the  part  of  the  changer  who  sold,  and 
the  traveller  who  bought.  At  present,  the  premium  has 
passed  from  the  gold  to  the  silver  ;  by  what  sorcery  is  it 
that  what  was  formerly  innocent  should  now  become 
criminal  ? 

A  fact,  however,  has  occurred,  the  announcement  of 


OF    THE    FALL    OF    GOLD.  197 

which  has  cooled  the  ardour  with  which  certain  persons 
have  set  about  demanding  the  application  of  the  edicts  of 
the  ancient  regime  agrinst  the  purchase  and  sale  of  coins 
at  a  premium,  and  also  against  the  trade  in  ingots,  as  often 
as  they  were  at  a  premium  in  relation  to  the  tariff  of  the 
Mint.  It  has  been  observed  that  the  Bank  of  France, 
which  is  treated  with  merited  consideration  by  the  State, 
gave  itself  up  to  this  commerce  on  a  grand  scale  at  the 
very  moment  when  it  was  denounced  with  so  much  hub- 
bub, as  a  crime  against  the  rights  of  the  State.  The 
monthly  returns  in  the  Moniteur,  upon  the  subject  of  the 
Bank  of  France,  contained  a  prominent  announcement 
during  the  latter  part  of  1855,  and  the  whole  of  the  years 
1856  and  1857,  in  the  following  words  :  Premiums  paid 
for  the  purchase  of  gold  and  silver  bullion.  These  trans- 
actions were  mostly  in  ingots,  but  they  also  included  coin- 
ed specie,  which  even  for  the  Bank  were  preferable,  inas- 
much as  the  Bank  purchased  ingots  only  to  send  them  to 
the  Mint.  Besides,  there  is  no  way  of  distinguishing 
them  :  the  trade  in  ingots  and  that  in  coins  are  insepara- 
bly connected  ;  they  are  so  practically,  as  well  as  in  the 
ideas  of  those  retrograde  writers  who  have  astonished  the 
public  with  their  passionate  appeals  for  the  intervention 
of  the  government.  The  old  edicts  were  equally  merciless 
towards  the  one  and  the  other  of  these  operations.  The 
edict  of  the  24th  October,  1711,  the  application  of  which 
has  been  demanded  recently  in  France,  contains,  in  the 
very  article  which  prohibits  the  melting  of  money  by  pri- 
vate individuals,  an  interdict  against  the  purchase  of  gold 
or  silver  bullion  at  a  higher  rate  than  the  tariff  of  the 
mints,  and  the  penalty  consisted  of  confiscation,  with  the 
addition  of  "  an  arbitrary  fine  "  (I  quote  the  words  of 
the  text)  "which  shall  not  be  less  than  the  value  of  the 
specie  confiscated."  At  this  rate,  the  Bank  ought  to  be 
condemned  to  pay,  for  confiscation  and  fine,  a  fabulous  sum, 


198  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

something  like  2  milliards  (£80,000,000),  if  not  more  : 
for  it  probably  purchased  more  than  a  milliard  in  the 
course  of  the  three  years  1855,  1856,  and  1857.  In  virtue 
of  the  salutary  principle  of  equality  before  the  law,  it  would 
have  been  impossible  to  have  summoned  before  a  magis- 
trate the  money-changers,  without  placing  beside  them  at 
the  bar,  the  governor  and  directors  of  our  great  financial 
institution. 

On  the  subject  of  the  exportation  of  specie,  of  the 
penalties  with  which  it  was  formerly  visited,  and  of  the 
idea  which  has  been  recently  put  forth,  of  either  reviving 
them  in  full  vigour,  or  with  some  mitigation,  or  of  sub- 
stituting for  them  a  custom-house  duty,  I  will  add  nothing 
to  that  which  has  already  been  said  previously  (Section 
V.,  Chap.  V.),  and  again,  more  specially,  in  the  preceding 
chapter. 


CHAPTER  VIII 

OF   A  DIFFEKENT  SOLUTION  WHICH  HAS  BEEN  EECOMMENDED,  AND 
WHICH  WOULD  CONSIST   IN  THE  ADOPTION  OF  A  GOLD  STANDARD. 

IN  the  midst  of  the  difficulties  with  which  our  monetary 
system  is  now  surrounded,  some  persons  have  proposed  a 
solution  which  would  consist  in  withdrawing  from  silver 
the  quality  of  the  standard,  and  attaching  it  to  gold.  It 
would  be  understood  that  the  franc,  deprived  thenceforth 
of  all  connection  with  our  metrical  system,  would  be  com- 
posed of  about  29  centigrammes  of  fine  gold,  or  of  32  cen- 
tigrammes and  a  fraction  of  gold  of  the  fineness  of  nine- 
tenths.  As  regards  silver,  the  only  choice  is  between  the 
two  following  courses  :  either  to  reduce  it  to  the  condition 
of  a  token  as  in  England,  or  to  lessen  the  proportion  of 
metal  contained  in  the  piece  hitherto  called  a  franc  ;  it 


OF    THE    FALL    OF    GOLD.  199 

might  contain  4  grammes  of  fine  silver  instead  of  4J^ 
grammes.,  with  the  power  of  afterwards  making  another 
diminution  if  the  divergence  between  gold  and  silver  in- 
creased. These  two  combinations  resemble  each  other  very 
mueh;  they  spring  from  the  same  source,  and  are  tainted 
with  the  same  vice.  In  both  cases  the  franc  would  cease 
to  be  what  the  law  has  established  :  4.1  grammes  of  fine 
silver.  But  the  attempt  may  as  well  be  given  up,  for  do 
what  we  will,  it  can  be  called  nothing  but  coining  false 
money.  When  Philippe  le  Bel  diminished  the  quantity 
of  silver  contained  in  the  crowns  of  his  time,  he  never  did 
anything  more  serious  or  more  characteristic.  In  vain  will 
it  be  said  that  the  law,  in  giving  the  name  of  a  piece  of 
20  francs  to  a  certain  weight  of  gold,  has  assimilated  29 
centigrammes  of  gold  to  the  franc  ;  to  this  argument 
there  is  a  peremptory  answer  :  the  law  has  not  said  that 
the  franc  was  29  centigrammes  of  gold  ;  it  has  said,  very 
expressly,  that  the  franc  was  4J  grammes  of  silver,  and 
when  it  assimilated  29  centigrammes  of  gold  to  4J 
grammes  of  silver,  it  was  in  a  temporary  manner,  and  this 
provisional  arrangement  should  cease  from  the  moment 
that  29  centigrammes  of  gold  ceased  to  be  effectively  the 
equivalent  of  4\  grammes  of  silver.  However  well  dis- 
posed we  may  be,  it  is  impossible  that  the  franc  can  con- 
tinue to  be  29  centigrammes  of  gold,  after  there  has  been 
a  serious  divergence  between  this  weight  of  gold  and  4J 
grammes  of  silver  ;  unless  we  altogether  obliterate  the 
general  disposition  which  is  at  the  head  of  the  law  of  the 
year  11,  and  also  give  a  direct  denial  both  to  the  affirma- 
tions relative  to  what  is  called  a  fixed  point  in  the  pream- 
ble, and  to  these  words  of  Gaudin,  that  the  kilogramme 
of  silver  shall  always  be  worth  200  francs,  and  shall  never 
be  worth  more  or  less,  and  to  those  of  the  same  minister 
indicating  the  obligation  we  should  be  under  to  remelt  the 
gold  coins  when  the  relative  value  of  the  two  metals  should 


200  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

be  changed  ;  not  to  mention  those  of  Cretet  upon  the  fix- 
edness of  the  nominal  value  of  silver,  those  of  Prieur,  upon 
.  the  same  subject  ;  and  twenty  passages  from  the  docu- 
ments which  served  as  a  preparation  for  the  law  of  the 
year  11,  and  which  are  all  explicitly  in  the  same  sense. 

But,  it  is  said,  did  not  the  legislator  of  the  year  11 
exceed  his  powers  ?  What  right  could  he  have  to  chain 
us  to  a  silver  standard,  and  to  decide  that  the  franc 
should  for  ever  be  the  weight  of  5  grammes  of  silver,  of 
nine-tenths  fineness,  or,  which  comes  to  the  same  thing, 
of  4J  grammes  of  fine  silver  ?  Here  there  is  a  distinction 
to  be  drawn  :  if  it  be  meant  that  at  the  time  when  the 
two  metals  presented  the  same  fixedness  of  value,  and 
when  there  was  no  reason  to  believe  in  the  approaching 
depreciation  of  the  one  more  than  the  other,  it  would  have 
been  perfectly  legitimate  and  correct,  in  the  point  of  view 
of  strict  probity,  to  change  the  standard,  and  to  invest 
with  that  dignity  gold  instead  of  silver,  then  nothing 
could  be  advanced  more  consistent  with  truth.  Only  that 
it  would  have  been  very  like  changing  for  the  sake  of 
change,  for  it  is  by  no  means  proved,  in  the  judgment  of 
those  who  have  reflected  on  these  matters,  that  in  a  gen- 
eral sense,  and  taking  all  the  circumstances  and  qualifica- 
tions into  account,  gold  may  not  have  better  claims  than 
silver  to  be  invested  with  the  functions  of  the  monetary 
standard.  I  know  more  than  one  good  judge  who  is  of  an 
opposite  opinion.  It  would  have  been  possible,  in  thus 
changing  the  monetary  unit  from  silver  to  gold,  to  pre- 
serve the  relation  established  between  this  unity  and  the 
metrical  system  :  to  this  end  it  would  have  sufficed  to 
have  adopted  for  the  monetary  unit  the  gramme  of  gold, 
of  nine-tenths  fineness,  or  5  grammes,  or  even  10  grammes. 
On  these  terms,  and  under  these  conditions,  the  change  in 
the  standard  might  have  been  justified ;  it  would  have 
been  effected  in  the  spirit  which  animated  the  legislator  of 


OF    THE    FALL    OF    GOLD.  201 

the  year  11,  continuing  the  most  honourable  and  judicious 
traditions  of  the  French  Kevolution.  It  would  not  have 
contravened  the  engagements  in  the  preamble  of  the  law 
of  the  year  11,  which  invokes  the  execution  of  transactions 
and  the  preservation  of  property.  But  it  would  be  another 
thing  to  alter  the  standard,  and  transfer  that  attribute  to 
gold,  at  the  very  moment  when  it  is  impaired  in  value  and 
launched  in  a  movement  of  depreciation.  It  were  vain  to 
dissimulate,  under  such  circumstances,  that  the  real  mo- 
tive for  the  change  consists  precisely  in  that  depreciation 
in  near  perspective,  by  which  the  State  would  benefit  ille- 
gitimately at  the  expense  of  its  creditors,  and  which  de- 
serves to  be  severely  characterised. 

Doubtless,  the  legislator  of  the  year  11  has  bound  us, 
but  wherefore  ?  What  is  the  servitude  which  he  has  im- 
posed on  us  ;  what  more  than  that  which  all  honest  people 
accept,  of  paying  exactly  their  debts,  and  of  fulfilling  faith- 
fully their  promises  ?  Yes,  thus  far,  the  legislator  of  the 
year  11  controlled  our  liberty  ;  but  in  so  doing  he  did  not 
exceed  his  powers.  If  he  did  dispose  of  us,  it  was  by  the 
same  right  as  that  by  virtue  of  which  he  defined  all  the 
conservative  laws  of  property.  He  also  disposed  of  us,  and 
restricted  our  liberty  when  he  enacted  that  the  State 
should  pay  at  certain  intervals,  and  without  deduction,  the 
interest  of  the  public  debt,  when  he  laid  down  the  princi- 
ple that  the  State  should  not  deprive  the  humblest  citizen 
of  his  field,  otherwise  than  paying  him  its  full  value,  and 
until  after  the  expropriation  should  have  been  proved  by 
solemn  forms  to  be  necessary  for  the  public  interest  ;  he 
disposed  of  us  and  fettered  our  liberties  when  he  inscribed 
in  the  code  the  means  of  coercing  the  debtor  who,  being 
indebted  100  francs,  should  pretend  to  acquit  himself  by 
the  payment  of  50  or  75.  Who  has  ever  discovered  that 
when  these  bonds  were  forged  by  the  legislator  he  exceeded 
his  powers  ?  Such  a  servitude  as  this,  instead  of  being 


202  MEASURES    TO    AVERT   THE   EVIL   EFFECTS 

repudiated  by  a  free  people,  is  the  very  yoke  which  they 
are  proud  of  bearing.  Let  us  mistrust  the  liberty  which 
would  consist  in  releasing  us  from  the  engagement  by  vir- 
tue of  which  the  franc,  under  present  circumstances, 
ought  not  to  be  anything  but  5  grammes  of  nine-tenths 
fineness,  or  else  the  quantity  of  gold  which  is  freely  ex- 
changed in  the  market  for  that  quantity  of  silver.  In  this 
pretended  liberty  there  is  nothing  to  be  seen  but  false 
money,  and  State  bankruptcy. 

England  may  be  regarded  as  having  effected  in  1816 
the  delicate  operation  of  the  alteration  of  the  standard. 
She  then  substituted  the  standard  of  gold,  frankly  avowed, 
for  the  standard  of  silver  which  had  been  expressly  chosen 
in  ancient  times,  but  of  which  the  titles  had  become  some- 
what obscured  in  people's  minds,  without,  however,  being 
quite  forgotten.  At  that  time,  the  men  who  exercised 
the  greatest  influence  on  the  government  and  on  public 
opinion,  allowed  themselves  to  be  unduly  influenced  by  the 
advantage  which  gold  possesses  of  being  more  portable 
than  silver.  They  thought  also  that  gold  fulfilled  better, 
or  at  least  less  imperfectly  than  silver,  the  important  con- 
dition of  fixedness  of  value.  In  that,  they  probably  de- 
ceived themselves,  and  if  at  the  present  time  the  most 
competent  judges  in  such  matters  in  England  were  con- 
sulted, a  great  number  would  pronounce  themselves  in  an 
opposite  sense.  But  it  is  essential  to  add  that  in  1816 
there  was  nothing  which  warranted  the  expectation  that 
the  relation  of  gold  and  silver  would  be  modified.  It  was 
still  less  probable  that,  if  a  change  did  occur,  it  would  con- 
sist in  a  fall  in  the  value  of  gold.  The  fact  is,  that  the 
relation  between  the  two  metals  underwent  in  the  succeed- 
ing years  a  very  slight  modification,  which  was  maintained 
until  1848  or  1849,  but  it  was  in  the  direction  of  a  rise  of 
gold  relatively  to  silver,  and  not  of  its  depreciation. 

It  may  be  here  remarked  that,  at  the  time  in  question, 


OF    THE    FALL    OF    GOLD.  203 

England  was  in  a  position  to  make  a  free  choice  on  the 
subject  of  a  monetary  system,  inasmuch  as,  for  about 
twenty  years  previously,  she  had  been  under  the  regime  of 
paper  money,  owing  to  the  suspension  of  payments  in 
specie  by  the  Bank,  which  dated  from  the  month  of  Feb- 
ruary, 1797. 

It  is  still  more  important  to  observe,  if  history  is,  as  I 
believe  it  to  be,  warranted  in  saying  that  in  1816,  England 
altered  the  monetary  standard  and  substituted  gold  for 
silver,  which  previous  to  the  period  of  paper  money  per- 
formed this  part,  it  should  also  add  that  the  British  legis- 
lator of  1816  by  no  means  thought  that  he  was  perform- 
ing an  act  of  so  wide  a  bearing,  but  on  the  contrary  he  be- 
lieved himself  to  be  remaining  faithful  to  ancient  tradi- 
tions. In  fact,  throughout  this  affair,  parliament  followed 
almost  blindly  the  ideas  and  opinions  which  Lord  Liver- 
pool had  developed  in  his  Treatise  on  the  Coins  of  the 
Realm,  written  in  1805,  a  work  which  is  a  sort  of  public 
document,  for  it  appeared  in  the  form  of  a  letter  to  the 
king.  This  statesman,  in  opposition  to  other  authorities, 
older  and,  if  I  may  be  allowed  to  say  so,  more  versed  than 
he  in  such  matters,  maintained  in  his  treatise  the  opinion 
that  silver  had  for  a  long  time  ceased  to  be  the  monetary 
standard  in  England,  and  that,  consequently,  the  British 
legislature  was  perfectly  free  to  choose  between  gold  and 
silver. 

Whatever  may  be  the  case  in  England,  the  idea  of 
altering  the  standard  in  France,  in  these  later  times,  finds 
determined  partisans.  I  regret  to  have  to  cite  among  the 
writers  who  have  espoused  this  view,  M.  E.  Levasseur,  one 
of  the  young  men  whose  career  has  been  marked  with 
great  distinction.  The  sagacity  of  which  he  has  already 
given  such  repeated  proofs,  in  the  collection  and  verifica- 
tion of  facts,  would  not  allow  M.  Levasseur  to  deceive 
himself  on  the  real  character  of  the  legislation  of  the  year 


204  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

11.  He  does  not  deny  that  the  intention  of  the  legislature 
at  that  time  was  to  have  one  sole  standard.,  and  to  confer 
that  attribute  upon  silver.  He  regrets  that  in  1848  and 
1849,  at  the  origin  of  the  working  of  the  mines  of  Califor- 
nia, a  more  decided  stand  was  not  taken  against  gold. 
But  in  the  state  to  which  matters  have  now  arrived,  he 
considers  that  the  simplest  and  best  course  is  to  bow  to 
the  authority  of  what  he  believes  to  be  accomplished  facts, 
and  to  .consider  gold  as  having  taken  by  main  force  the 
place  of  silver,  a  place  which  it  must  of  necessity  be  left 
to  occupy,  without  troubling  ourselves  to  inquire  whether 
it  has  been  usurped  or  not.*  In  a  word,  he  would  here 
apply  the  doctrines  of  the  fatalist  school,  which  is  so  easily 
resigned  to  accept  that  which  morality  would  urge  us  to 
reject,  under  the  pretext  that  destiny  has  pronounced  its 
judgment.  Nevertheless,  it  does  not  seem  to  me  that  we 
are  yet  reduced  to  quite  so  much  philosophy  ;  it  seems  to 
be  still  possible  to  keep  each  in  its  proper  place,  to  the 
great  honour  of  principles,  and  to  the  great  satisfaction  of 
a  multitude  of  respectable  interests.  There  is  much  silver 
money  still  remaining  in  France,  sufficient  to  compose, 
with  bank  notes,  and  with  gold  itself,  which  it  is  not  in- 
tended to  proscribe,  an  instrument  of  exchange  quite 
efficacious,  and  very  firmly  established,  in  conformity  with 
the  idea  which  animated  the  legislation  of  the  year  11. 

There  are  plenty  of  selfish  interests,  plenty  of  minds 
which'  from  levity,  presumption,  or  unscrupulousness,  are 
in  constant  coalition  against  the  right,  which  is  a  sufficient 
motive  why  those  who  are  guided  by  reason  and  the  pub- 
lic interest,  should  defend  sound  principles  when  they  are 
in  danger.  One  of  the  titles  by  which  science  recommends 
itself  most,  is  that  it  keeps  constantly  unfurled  the  banner 
of  principle,  which  it  never  deserts  ;  and  it  must  not  be 

*  The  views  of  M.  Levasseur  are  given  in  a  very  interesting  volume, 
entitled,  Question  de  FOr;  Book  IV.,  Chap.  IX. 


OF    THE    FALL    OF    GOLD.  205 

found  sanctioning  those  infractions  and  violations  of  prin- 
ciple to  which  politicians,  for  their  convenience  or  repose, 
or  the  success  of  their  combinations,  are  always  inclined. 

The  argument  which  appears  to  have  seduced  M. 
Levasseur,  is  that  the  entire  effect  to  be  apprehended 
from  the  new  mines  is  already  produced,  the  dreaded  per- 
turbation already  consummated  ;  to  use  his  own  words,  if 
we  were  to  take  the  necessary  steps  for  maintaining  the 
silver  standard,  ^  we  should  not  avert  a  revolution  already 
effected,  but  only  make  a  counter-revolution."  M.  Le- 
vasseur has  here  fallen  into  a  grave  error  :  we  are  very  far 
from  the  time  when  the  full  effects  of  the  new  gold  mines 
will  have  been  accomplished.  It  is  even  remarkable  that 
up  to  tin's  time  the  fall  in  gold,  as  compared  with  silver, 
has  been  hardly  perceptible.  In  this,  the  predictions  which 
would  have  been  thought  the  most  justifiable  have  for  the 
moment  failed,  and  this  theory  seems  to  have  suffered  a 
defeat;  but  the  circumstances  of  the  case  have  admitted 
of  explanation. 

M.  Levasseur's  mode  of  arguing  has,  if  I  mistake  not, 
a  great  defect  ;  it  tends,  in  fact,  assuredly  against  his 
own  intentions,  to  sanction  a  practice  deserving  of  con- 
demnation. It  would  furnish  a  specious  pretext  for  the 
successive  degradation  of  the  coinage  in  the  following 
manner  :  whenever,  by  the  inattention  or  negligence  of 
the  government,  the  coins  in  circulation  should  not  have 
been  gradually  renewed  by  recoinage,  so  as  to  furnish  a 
circulating  medium  which  had  always  the  full  legal  weight, 
it  would  be  possible,  by  applying  the  reasoning  of  M.  Le- 
vasseur, to  pretend  that  it  is  warrantable  to  proceed  to  a 
new  coinage  of  lighter  pieces,  that  is  to  say,  by  the  re- 
production not  of  the  primitive  type,  but  only  of  the  mean 
weight  of  the  pieces  in  actual  circulation.  It  is  not  thus 
that,  in  the  country  where  the  monetary  system  has  pre- 
served the  strictest  relations  with  the  principles  of  hon- 


206  MEASURES   TO   AVEBT    THE    EVIL    EFFECTS 

esty,  statesmen  and  philosophers  have  reasoned,  men  to 
whose  influence  is  due  the  testimony  of  respect  for  the 
rights  of  property  and  the  security  of  transactions  :  it  is 
not  thus  that  reasoned,  under  William  III.,  the  illustrious 
Chancellor  of  the  Exchequer,  Montague,  and  the  eminent 
thinker  Locke,  in  whose  footsteps  the  parliament  felt 
bound  in  honour  to  march. 

It  must  be  plainly  said  that  the  proposal  to  adopt  the 
gold  standard  at  the  present  time  in  France,  is  opposed  to 
the  best  established  views  upon  the  essence  of  money. 
An  English  writer,  whom  I  have  already  had  occasion  to 
cite,  Mr.  J.  Maclaren,  has  in  a  very  recent  publication 
maintained,  with  reason,  that  gold  has  to  some  extent 
forfeited  its  claim,  to  the  quality  of  a  standard.  "  The 
institution  of  a  measure  of  value,  by  which  the  distribu- 
tion of  the  property  of  the  society  can  be  regulated,  is, 
confessedly,  a  necessity  in  a  civilised  community  ;  men 
must  have  such  a  measure  by  which  to  arrange  their 
transactions.  Again,  every  one  would  allow  that  the  chief 
point  to  be  attended  to,  in  the  choice  of  this  measure, 
should  be  invariability  ;  and  it  would  seem  to  follow,  as  a 
matter  of  course,  that  when  the  commodity  chosen  for 
this  purpose  had  lost  a  portion  of  the  quality  which  origi- 
nally fitted  it  for  its  office,  another  commodity,  if  any  one 
could  be  found,  possessing  the  requisite  qualities  in  a  su- 
perior degree,  should  be  at  once  substituted  for  it 
before  any  change  in  the  distribution  of  the  property  of 
the  society  had  taken  place  ;  and  this  seems  so  plain 
that  it  is  almost  a  waste  of  time  to  state  it."  *  From 
hence  Mr.  Maclaren  concludes  that  it  is  now  the  duty 
of  parliament  to  return  from  a  gold  to  a  silver  stand- 
ard. I  do  not  undertake  to  say  that  parliament  will 
yield  to  the  suggestions  of  Mr.  Maclaren,  though  he  has 

*  "A  Sketch  of  the  History  of  the  Currency,"  comprising  a  brief  review 
of  the  opinions  of  the  most  eminent  writers  on  this  subject,  page  358. 


OF    THE    FALL    OF    GOLD.  207 

furnished  very  good  arguments  in  their  favour  ;  but,  as- 
suredly, his  reasoning  condemns,  in  toto,  the  proposition 
which  would  at  this  juncture  tend  to  induce  France  to 
adopt  a  gold  in  lieu  of  a  silver  standard. 

In  the  commission  appointed  in  France  in  1857,  this 
proposition  had  nevertheless  an  advocate,  and  it  was  in 
the  person  of  one  not  the  least  considerable  of  its  mem- 
bers. But  the  system  of  this  eminent  functionary  is  un- 
sound from  its  very  foundation.  In  fact,  according  to  him, 
the  law  of  the  year  11,  instead  of  resolving  in  favour  of 
silver  the  question  of  a  single  standard,  would  admit  the 
system  of  a  double  standard.  The  sole  response  to  be 
made  to  such  an  assertion  is  by  appealing  from  the  author 
to  himself  better  informed.  It  is  only  necessary  to  beg 
him  to  read  attentively  the  law  of  the  year  11,  and  if  the 
wording  and  arrangement  of  the  law  leave  him  in  any 
doubt,  to  cast  an  eye  upon  the  expose  des  motifs. 

To  the  preceding  considerations,  and  which  appear  to 
me  of  more  than  sufficient  weight  to  incline  the  balance 
in  favour  of  an  immediate  intervention  of  the  legislature, 
with  a  view  of  guaranteeing  our  monetary  system  from 
the  dangers  which  menance  it  (the  system  as  defined  and 
understood  by  the  law  of  the  year  11),  other  reasons  might 
be  added,  especially  those  which  appear  of  a  minor  order 
to  certain  minds  who  believe  themselves  more  practical 
and  shrewd  than  their  neighbours,  because  they  exclude 
from  their  politics  all  honourable  regard  for  great  thoughts 
and  great  principles.  At  the  present  time  there  may  be 
observed  among  the  civilised  nations  a  certain  movement 
in  favour  of  the  adoption  of  a  uniform  system  of  weights 
and  measures,  which  would  inevitably  be  the  metrical 
system  of  France.  Several  States  in  both  hemispheres 
have  officially  given  in  their  adhesion  to  it ;  and  the  idea 
is  gaining  ground,  noiselessly  and  slowly  it  is  true,  among 
the  great  nations  of  the  world,  in  England,  Germany,  and 


208  MEASURES    TO   AVERT    THE    EVIL    EFFECTS 

the  United  States.  It  will,  perhaps,  be  remembered  that 
at  the  conclusion  of  the  Universal  Exposition  of  1855,  all 
the  commissioners,  and  all  the  juries  then  present  in 
Paris  signed  a  declaration  which  called  the  attention  of 
government  to  the  utility  and  great  convenience  of  a  gen- 
eral convention  for.  this  object,  and  an  international  asso- 
ciation was  formed  for  the  purpose.*  Such  innovations 
as  these,  if  they  do  not  resolve  themselves  into  a  profit 
measurable  in  shillings  and  pence,  are  yet  not  without 
their  price.  It  seems  also  that  France,  which  took  the 
initiative  in  the  metrical  system,  and  which  called  on  all 
the  nations  to  concur  in  its  adoption,  as  it  was  afterwards 
in  the  free  exercise  of  her  reason  and  for  the  common  in- 
terest adopted  by  herself,  should  be  the  last  country  from 
whom  should  be  expected  any  acts  calculated  to  weaken 
or  thwart  the  tendency  to  imitate  her  example.  If  so,  it 
is  not  superfluous  to  add  that  in  abandoning  the  silver 
standard,  and  substituting  one  of  gold,  according  to  the 
process  recommended, — which  would  consist  in  enacting 
that  henceforth  the  monetary  unit  should  be  the  twentieth 
part  of  the  actual  pieces  of  gold  of  20  francs, — we  should 
make  a  breach  in  the  metrical  system,  we  should  destroy 
the  prestige  which  it  enjoys  among  the  civilised  nations, 

*  The  most  remarkable  manifestation  which  resulted  from  this  fact  has 
emanated  from  the  English  committee,  which  formed  part  of  the  Inter- 
national Association.  In  a  series  of  publications,  this  committee,  after 
having  maturely  considered  the  subject,  has  declared  that  a  decimal  system 
of  weights  and  measures,  of  which  the  units  shall  be  allied  to  each  other  by 
decimal  relations,  is  for  the  interest  of  the  public,  and  that  the  best  basis  to 
give  to  the  whole  system  is  the  metre,  such  as  was  determined  by  the  Inter- 
national Commission  under  the  French  Republic.  I  wish  to  draw  the  at- 
tention of  enlightened  men  to  the  last  of  these  publications,  entitled,  What 
is  the  best  Unit  of  Length  ?  It  is  from  the  pen  of  Mr.  James  Yates,  one  of 
the  vice-presidents  of  the  International  Association,  and  one  of  the  men  who 
in  the  two  hemispheres  have  devoted  most  labour  to  the  task  of  spreading 
the  fruitful  idea  of  a  uniform  system  of  weights  and  measures  for  the  whole 
civilised  world. 


OF    THE    FALL    OF    GOLD.  209 

so  as  to  render  impossible  its  universal  adoption,  which 
might  otherwise  be  very  probable.  In  fact,  the  franc, 
such  as  it  is  at  this  time,  forms  an  integral  part  of  the 
metrical  system.  Until  the  year  11,  inclusive,  the  legis- 
lature of  France,  of  1789,  attached  the  greatest  impor- 
tance to  its  remaining  so,  and  its  intention  has,  down  to 
our  day,  been  religiously  respected.  Now,  would  not  the 
franc  be  banished  from  the  metrical  system,  if  it  were 
henceforth  understood  that  the  monetary  unit  is  the  twen- 
tieth part  of  the  quantity  of  the  precious  metal  contained 
in  the  pieces  of  gold  of  20  francs  ?* 


CHAPTER  IX. 

APPRECIATION    OF    THE  SYSTEM  WHICH  CONSISTS  IN  ADJOURNING 
INDEFINITELY  THE  LEGISLATIVE  SOLUTION. 

I  WILL  conclude  with  a  reflection.  There  are  two  ways 
of  infringing  the  prescriptions  of  the  legislator  of  the  year 
11,  and  of  drawing  upon  French  society  the  violations  of 
right,  as  well  as  the  sufferings  and  the  perturbations  of  all 
kinds,  of  which  we  have  fully  sketched  the  perspective  in 
the  course  of  this  work  ;  it  may  also  be  said  that  there  are 
two  ways  of  subjecting  the  State  to  those  injurious  accu- 
sations which  it  would  not  be  easy  to  refute.  The  first, 
more  frank  or  more  audacious,  would  be  to  lay  to-morrow 
before  the  legislative  body  a  bill  providing  that  henceforth 
silver  is  deprived  of  the  attribute  assigned  to  it  by  the 
legislation  of  the  year  11  (in  that  respect  a  faithful  inter- 
preter of  all  the  national  assemblies  which  had  succeeded 
since  1789),  and  that,  for  the  future,  gold  shall  be  the 

*  Instead  of  weighing  exactly  5  grammes,  the  franc  would  have  a  weight 
represented  by  an  indefinite  fractional  number  (0  gramme  32258,  &c.) 
14 


210  MEASURES    TO    AVERT    THE    EVIL    EFFECTS 

standard  metal  under  the  conditions  which  I  have  just 
narrated.  The  other,  more  timid,  would  be  to  remain 
with  our  arms  crossed,  and  to  leave  things  to  follow  in- 
definitely the  course  which  they  have  taken  for  themselves. 
From  that  time,  our  silver  money  would  continue  to  flow- 
out  of  the  country  until  the  last  5  franc  piece  had  left 
France.  To  retain  even  the  smaller  pieces  it  would  be 
necessary  to  reduce  them  to  the  condition  of  tokens,  by 
withdrawing  a  part  of  the  fine  metal  which  they  contain. 
The  demonetisation  of  silver  would  then  be  an  accom- 
plished fact.  At  whatever  point  of  view  I  place  myself, 
whether  I  regard  it  as  a  question  of  interest,  of  equity,  or 
of  honour,  I  cannot  perceive  a  great  difference  between 
the  one  and  the  other  of  these  two  processes.  The  effects 
would  be  the  same,  they  would  be  equally  disastrous, 
equally  condemnable.  On  some  future  day,  History, 
when  its  pen  shall  be  held  by  judges  firmly  devoted  to  the 
cause  of  principle,  such  as  was  Tacitus  for  his  time,  will 
visit  the  one  or  the  other  of  these  projects  with  its  sever- 
est condemnation.  In  many  respects  omission  is  almost 
as  culpable  as  action.  This  is  especially  true  in  relation 
to  that  particular  social  force,  the  destination  of  which  is 
to  show  itself  in  action,  and  that  force  is  called  the  gov- 
ernment. 

The  abatement  which  has  taken  place  since  the  com- 
mencement of  1858,  in  the  exportation  of  silver  from  the 
French  territory,  is  a  fortunate  circumstance,  inasmuch 
as  it  renders  more  practicable  the  conservation  of  the 
monetary  regime  prescribed  by  the  law  of  the  year  11  ;  so 
far  we  have  reason  to  congratulate  ourselves.  This  must 
not,  however,  be  made  an  excuse  for  inactivity,  or  for  an 
indefinite  temporisation.  The  current  which  drew  the 
silver  from  within  our  frontiers  has  not  ceased  to  exist, 
and  nothing  indicates  that  it  is  likely  to  cease.  On  the 
contrary,  it  is  probable  that  it  will  recommence  with  great 


OF    THE    FALL    OF    GOLD.  .    211 

vivacity.  Let  the  event  then  only  be  taken  for  what  it 
really  is,  a  respite  given  to  the  authorities  of  France  to 
enable  them  to  act.  It  would  be,  perhaps,  better  to  say 
that  it  is  a  pause  on  the  part  of  the  sole  authority  to 
which  governments  own  themselves  amenable,  Divine 
Providence,  to  enable  every  one  do  to  his  duty. 


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